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US officials believe the country can withstand a short-term spike in oil prices for up to four weeks. The White House calls the rise a temporary disruption and is taking steps to stabilise markets.
The United States and Israel's war in Iran has rattled global energy markets and raised concerns over increasing oil prices. This comes at a time when Tehran's Islamic Revolutionary Guards Corps (IRGC) announced the closure of the Strait of Hormuz, an arterial corridor that transports nearly 20% of the world's oil supply. As the oil market continues to be rattled by tensions in the Middle East, speculation is rife over whether US President Donald Trump's administration will change its military strategy.
According to a Politico report citing a US official, the Trump administration has not seriously weighed changing its military strategy despite concerns over rising oil prices. Another added that the administration would need to see oil prices remain steady over several weeks before considering any change in strategy.
How long can the US weather an oil price spike?
The development comes as the Trump administration believes that Washington can weather a brief spike in oil prices, potentially lasting up to four weeks, before the political fallout causes damage. Additionally, the Trump administration's confidence was boosted on Tuesday (local time) after oil prices dropped to $80 per barrel, following a record high of $120 per barrel the day before. The move has further reinforced the administration's view that these spikes are temporary and manageable.
According to the officials, the US has three to four weeks to manage the situation before oil price hikes become a durable political problem. The official said that assuming the economy continues to improve once the active phase of the war concludes, the administration will have the entire summer (May to August) to benefit from the recovery.
Trump administration tries to soothe traders
Instead of changing its strategy or course, the Trump administration spent most of its Monday trying to calm the spooked investors, who have been worried about the disruptive impact of a prolonged war on the oil supply chains. Officials have also been trying to ease the fears of Republicans, who think that the Iran war is opposite to the affordability message they believe the Grand Old Party (GOP) should be pushing forward as it battles to retain control of Congress in the midterm elections in November.
Americans think war will cause an oil price hike
According to a recent Quinnipiac Poll, over seven in 10 voters were very concerned or somewhat concerned that the war would cause oil and gas prices to rise in the United States. Additionally, most voters opposed the US military action, are against deploying American ground troops to Iran, and believe the conflict is unlikely to end quickly.
Oil price hike a ‘short-term disruption’: Trump
White House spokesperson Taylor Rogers said that the US President has consistently described the spike in oil and gas prices as a "short-term disruption," and added that once the military objectives are achieved and Iran's regime is neutralised, the oil and gas prices are expected to fall quickly. Rogers also noted that these prices could even drop below levels seen before the war and that the American families would benefit from this outcome.
Meanwhile, the White House is taking steps to manage oil prices, including considering easing sanctions on Russian oil and continuing to signal that the conflict will be brief.
About the Author
Swati Gandhi
Swati Gandhi is a digital journalist with over four years of experience, specialising in international and geopolitical issues. Her work focuses on fo...Read More
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