US oil prices surged to $90 a barrel on Friday after President Trump demanded unconditional surrender from Iran – fueling fears of a lasting conflict that Qatar’s energy minister warned could “bring down the economies of the world.”
Brent crude oil hit $86 a barrel, while West Texas Intermediate crude jumped above $90 – pushing national average gasoline prices to $3.32 a gallon on Friday, according to AAA.
The Dow Jones Industrial Average tumbled 562 points, or 1.2%, by Friday afternoon while the S&P 500 and Nasdaq fell 1.1% and 1%, respectively.
Investors are fearful that an ongoing conflict could prolong Iran’s blockade of the Strait of Hormuz, a vital maritime route for 20% of the world’s oil supply – which economists have warned could slam gasoline prices and overall inflation.
“I don’t have any concern about it,” Trump told Reuters Thursday, when asked about higher prices at the pump. “They’ll drop very rapidly when this is over, and if they rise, they rise, but this is far more important than having gasoline prices go up a little bit.”
Energy Secretary Chris Wright predicted Friday morning that gas prices will come down in a matter of “weeks, not months,” during an interview with “Fox & Friends.”
Qatar’s energy minister Saad al-Kaabi, meanwhile, said he expects all Gulf energy exporters to shut down “within days” – potentially pushing oil as high as $150 a barrel.
“This will bring down the economies of the world,” Kaabi told the Financial Times Friday.
“If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.”
Even if the war ended immediately, it would take Qatar “weeks to months” to return to a normal level of output after an Iranian drone strike forced it to close its largest liquified natural gas plant, the Ras Laffan, he said.
“Everybody that has not called for force majeure we expect will do so in the next few days that this continues,” Kaabi said, referring to a legal clause used when a company cannot meet contractual obligations due to external circumstances.
“All exporters in the Gulf region will have to call force majeure. If they don’t, they are at some point going to pay the liability for that legally, and that’s their choice.”
Though countries differ on their principal source of oil supply, the global market is ultimately integrated – so the supply disruption hitting China, Russia, India and other nations still has an impact on the US, according to Kenin Spivak, chief executive of SMI Group.
As the Iran conflict disrupts oil supplies, the US on Thursday issued a 30-day waiver for India to buy Russian oil – a sharp reversal from its earlier stance, which saw it slap a 25% tariff on the nation as punishment for buying energy from Moscow.
The Trump administration revoked the tariff last month on the condition that India would buy less energy from Russia and more oil from the US. Since then, India has also been purchasing more supply from the Middle East.
“This deliberately short-term measure will not provide significant financial benefit to the Russian government as it only authorizes transactions involving oil already stranded at sea,” Treasury Secretary Scott Bessent said in a post on X Thursday.
Earlier in the week, Trump also offered political risk insurance for oil tankers in the Gulf – adding that the US Navy will escort vessels, if necessary.
“Further action to reduce pressure on oil is imminent and…in the long-term, the actions we’re taking will dramatically increase the stability of the region and oil prices,” Trump said Thursday.
A White House official told The Post that the US economy is strong enough to weather any temporary oil price shocks, nodding to recent inflation data.
Consumer inflation slowed to 2.4% in January, its tamest pace since last May – though wholesale inflation heated up to 2.9%, according to the most recently-available government data.
“Thanks to President Trump’s leadership in his first term and current term, the United States remains the largest crude oil and natural gas producer in the world,” White House press secretary Karoline Leavitt told The Post.
“President Trump’s entire energy team, from the White House to the National Energy Dominance Council to Secretaries Wright and Bessent, have a game plan to keep oil prices stable throughout Operation Epic Fury,” Leavitt said.
Many shippers will likely continue avoiding the Strait of Hormuz despite the proposal for the US Navy to escort oil tankers, since it is unlikely to lead insurers to return coverage to pre-war levels of availability or cost, Spivak told The Post.
The biggest question on investors’ minds is how long the conflict will continue.
“If Trump pulls out within the next week or two, then we can snap back big time and see crude come flying back down,” Mahoney Asset Management CEO Ken Mahoney told The Post.
“The longer this goes on, and the longer crude stays elevated and moving up in price, the worse this may get. Oil is the ‘hot potato’ that gets passed along, fueling inflation,” he added.
