Will the US-Iran conflict trigger a surge in the oil market? Trump: Oil prices will fall back after hostilities end!

In recent days, as tensions between the U.S. and Iran continue to escalate, international oil prices have surged significantly, reigniting concerns about U.S. inflation and a potential recession.

On Tuesday, U.S. President Donald Trump told reporters at the Oval Office during a meeting with German Chancellor Merkel that once hostilities with Iran end, current high oil prices will fall back.

He acknowledged that “oil prices will remain high in the short term,” but added, “Once this situation ends, I believe oil prices will decline, even falling below previous levels.”

Trump also posted on social media that the U.S. will provide insurance for oil tankers passing through the Strait of Hormuz. If necessary, the U.S. Navy will begin escorting tankers through the Strait of Hormuz as soon as possible.

“Regardless, the U.S. will ensure the free flow of energy to the world,” he said.

Following Trump’s remarks, international oil prices retreated slightly from earlier in the day but still closed significantly higher.

On Tuesday, Brent crude futures rose by $3.66, or 4.7%, to $81.40 per barrel, the highest settlement since January 2025. U.S. crude oil futures increased by $3.33, or 4.7%, to $74.56 per barrel, the highest settlement since June.

The conflict in the Middle East has disrupted markets, with U.S. stocks falling sharply on Tuesday. Since the U.S. and Israel launched attacks on Iran early last Saturday, oil prices have soared.

Late on March 2, local time, an advisor to the Iranian Islamic Revolutionary Guard Corps stated that the Strait of Hormuz has been closed, and Iran will target all ships attempting to pass through the strait.

About 20% of the world’s oil consumption passes through this strait. Wall Street commodity strategists warned that if the strait remains closed for an extended period, oil prices could surge above $100 per barrel.

Trump has been pressuring the Federal Reserve to cut interest rates sharply. The rise in oil prices will further complicate the Fed’s rate decision.

On Tuesday, Minneapolis Federal Reserve Bank President Neel Kashkari said that the escalation of the Iran conflict has increased uncertainty about the U.S. economic outlook, making the Fed’s rate policy more unpredictable. He emphasized the need to closely monitor upcoming data.

Meanwhile, New York Fed President John Williams stated that it is too early to determine the impact of the Iran conflict on U.S. inflation and growth, but the U.S. economy’s reliance on imported oil is now much lower than in the past, and it has proven resilient in the face of energy price shocks. He also said that if inflation pressures ease as expected, the Fed will proceed with further rate cuts as planned.

(Source: Cailian Press)