Oil Executives Warn Trump of Price Surge Lasting Months

A driver refuels a tractor with diesel fuel at a truck stop in Tracy, Calif. (David Paul Morris/Bloomberg)

President Donald Trump and his officials tell Americans almost daily that the spike in fuel costs is a temporary blip that will reverse just as soon as he reaches a deal to end the war in Iran. 

The oil industry begs to differ.

For weeks, executives have been quietly warning the administration that the massive disruption to energy supplies caused by the campaign, now in its eighth week, is likely to lead to even higher prices for crude oil, gasoline, jet fuel and other vital products. They say the surge could last months — even after the fighting stops — according to people familiar with the conversations who asked not to be identified to discuss private matters. 

Some have advised the administration to prepare to make much bigger economic interventions, far surpassing the steps the White House has so far used to soften the market impact of the war, the people said.

Administration officials are acutely aware of the mounting economic and political costs of the conflict, with high gasoline prices threatening Republican control of Congress in November’s midterm elections and with it Trump’s ability to deliver on his domestic agenda.

Publicly, they remain upbeat, seeking to soothe markets even as diplomatic efforts to end the war struggle. Trump has said that gasoline prices are “not very high” given the extent of the U.S. military intervention, and that they’ll come down quickly. The national average gas price was $4.03 on April 22, the highest in roughly four years.

Image

(PeterHermesFurian/Getty Images)

Oil industry leaders say the world is rapidly approaching a critical juncture as it draws down prewar crude supplies as well as emergency stockpiles released by 32 countries in a bid to blunt disruptions. 

“We’re borrowing these product inventories to cover demand today,” Vitol Group CEO  Russell Hardy said at the FT Commodities Global Summit in Lausanne. But, he said, that can’t go on forever. “There are recessionary consequences from having to ration that demand.”

The warning signs are mounting globally. Oil supply disruptions have caused cooking fuel shortages and energy curbs in Asia. The cost of Dated Brent — the world’s most important price for real-world oil transactions — spiked to nearly $150 a barrel as refineries and other buyers race to line up supplies.

This week, Deutsche Lufthansa AG said it will scrub 20,000 summer flights and United Airlines Inc.’s chief executive joined others in the industry in saying ticket prices will rise further to offset a doubling in jet-fuel costs.

The last tankers to clear the Strait of Hormuz before the war began are reaching their final destinations in a market suddenly short of 13 million barrels of crude.

Since the start of the Iran war...
Jet Fuel: +60%
Sulfur: +53%
Urea: +49%
Heating Oil: +46%
Diesel: +46%
Brent Crude Oil: +36%
Fertilizer: +35%
Gasoline: +35%
WTI Crude Oil: +35%
European Natural Gas: +33%
Palm Oil: +14%
Coal: +12%
Iron Ore: +8%
Rice: +6%
S&P 500: +3%$VIX: -4% — Charlie Bilello (@charliebilello) April 22, 2026

“We’re really sensitive to an inflection point right now if we don’t get some movement on the cessation of hostilities,” said Wayne Winegarden, a senior fellow in economics at the Pacific Research Institute. “We really could see that step-up in oil prices from the levels we’re bouncing around right now.”

Administration officials have pointed to lower prices in futures markets for crude to be delivered later this year as evidence that higher costs won’t last.

“The futures prices are much lower than we are at present,” Treasury Secretary Scott Bessent told senators April 22. “Gasoline prices will come back to where they were — or perhaps lower” after the conflict ends, he added. 

At times, Trump’s advisers have suggested that prices may stay high into next year but later backtracked.

The administration’s public messages of calm dovetail with explicit encouragement from Trump to emphasize that the situation will improve, people familiar with the matter said. 

Administration officials look across an array of data as they assess oil disruptions, including at futures trading they see as a longer-term reflection of where the market thinks prices are heading, a White House official said. 

At the same time, the official said the White House is studying indicators of supply problems, particularly as it weighs interventions that could help address them, such as shipping and fuel waivers it issued in March. Administration officials also are regularly canvassing industry players, including oil producers and refiners, for updates on crude flows and processing, according to people familiar with the matters who requested anonymity to reveal private discussions. 

But there are signs even the futures market is beginning to view the administration’s claims with skepticism. On April 1, West Texas Intermediate for delivery in December was $71 a barrel, but that same contract is now $76 a barrel. That’s a roughly 7% increase over the past three weeks and is more than 20% higher than pre-war levels. Gasoline futures for delivery by year’s end have risen by roughly the same amount.

Some in the industry aren’t as reassured by futures markets. 

“Our board is kind of seeing this as a bigger problem maybe than the market’s saying,” Matthew Kaes Van’t Hof,CEO of Midland, Texas-based Diamondback Energy Inc., said last week at an energy conference. “The back end of the curve might be kind of lying to us a little bit,” he said, referring to the lower prices of oil for delivery later this year.

Image

TT Top 100 Logistics Companies

The largest 3PLs in North America continued to face volatile business conditions last year, from compressed margins to tariff-driven supply chain upheaval. Read more

Already, Phillips 66 was forced to take a nearly $1 billion loss from a bet that prices on oil and related derivative contracts would drop. 

“The disruption this will cause to energy markets and other macroeconomic measures will be significant. The unpredictable nature of the current administration makes business modeling near impossible,” an executive from an oil field services firm was quoted as saying in the Federal Reserve Bank of Dallas’ latest energy survey.

Even if the war were resolved immediately, energy analysts say it could take months or more to restore crude flows to anything approaching normal. Extensive damage to the region’s oil and gas infrastructure — including shut-in oil wells, pipelines and loading equipment — will keep flows suppressed and prices elevated even after tensions ease. And even if mines are swiftly removed from Hormuz — a process that could take months — it could be far longer before shippers are willing to put tankers, cargo and workers at risk inside the waterway. 

Vitol’s Hardy estimates the war has eliminated about 4% of global demand, a figure expected to rise the longer the strait remains shut. Refineries and petrochemical plants across Asia are cutting run rates and governments in Australia and Europe are encouraging people to drive less.

There’s little evidence that demand is falling in the U.S. yet. But there are signs of strain. American oil and petroleum product exports hit an all-time high this week as countries around the world scramble to replace supplies from the Middle East. That triggered a drop in U.S. gasoline and diesel stockpiles that was larger than analysts forecast.

“We’re getting to the point now where certain countries no longer have any fuel — no longer have jet fuel,” Amos Hochstein, a former energy adviser to President Joe Biden, said April 19 on CBS’s "Face the Nation." “Now, those are poor countries and now middle-income countries, but that eventually comes to the U.S.”

Trump has “got a couple of weeks before this can go much higher,” Hochstein predicted. 

The U.S. government’s official public forecasts — from its Energy Information Administration — envision Brent crude prices continuing to climb, with a peak of about $115 per barrel by the summer. That’s based on assumptions the conflict won’t last beyond April, with offline wells being restarted by the end of the year.

The EIA expects retail gasoline prices, meanwhile, to hit a monthly average of $4.30 per gallon in April. That would be well above the $2.98 average motorists were paying before the war.