Trump's Middle East War Hinges on Gas Station Price Tags

The United States executed "Operation Epic Fury" to eliminate Iran's Supreme Leader Khamenei, but unlike Venezuela, securing oil reserves does not appear to be the primary objective.

Iran's blockade of the Strait of Hormuz and attacks on Qatari gas fields have pushed crude oil toward $100 per barrel. Natural gas prices are surging even higher, raising concerns of a global energy crisis.

For the Trump administration facing midterm elections in November, inflation driven by soaring oil prices is expected to become a significant political burden.

U.S. and Israeli airstrikes have once again turned Iran into a battlefield. Middle East conflicts have historically been critical variables in energy markets and have repeatedly shaken the international order. Examining this war through an energy lens offers important insights.

Why Iran's 'Oil and Gas Development Rights' Card Was Never Played

The first key point is crude oil. Operation Epic Fury, launched by the U.S. on the 28th of last month (local time), superficially resembles the January ouster of Venezuelan President Nicolás Maduro. Both employed a strategy of "toppling the regime by shaking its leadership" through precision strikes—in this case, killing Supreme Leader Ayatollah Ali Khamenei, the pinnacle of Iran's theocracy. However, from an energy perspective, Venezuela and Iran present opposite situations.

The third factor is oil prices. As this column has repeatedly noted, the Iran strikes run directly counter to the Trump administration's objective of defending low oil prices. Many experts now agree the U.S. airstrikes could push oil above $100 per barrel. Scenarios of prices spiking to $150 are also considered possible. This differs markedly from Operation Midnight Hammer last June, when U.S. precision strikes on three Iranian nuclear facilities barely moved oil prices. Whether the Trump administration prepared countermeasures for surging oil prices when deciding to strike Iran will be a crucial point to watch. In fact, oil prices are likely to be the critical variable determining the duration of this war. While many factors matter—Iran's retaliation level, U.S. weapons stockpiles, and responses from Gulf states—oil-driven inflation is something the Trump administration desperately wants to avoid ahead of November's midterm elections. On this note, reports emerged that the average U.S. retail gasoline price exceeded $3 per gallon on the 2nd (local time) for the first time since last November. This is not something the Trump administration can take lightly.

Days before Operation Epic Fury, the Financial Times published an intriguing report. Iran was internally considering proposing the resumption of investment in its oil and gas reserves as a card to break the deadlock in nuclear negotiations with the United States. One official said Iran intended to offer President Trump "a grand bargain," considering his fondness for deals. The FT added, however, that the proposal was never actually conveyed to President Trump.

Regardless of whether the proposal was made, questions remain. President Trump has pursued oil or mineral resources as primary objectives in Venezuela, in ceasefire negotiations with Ukraine, and in Greenland, where he has not abandoned annexation ambitions. Iran's proven oil reserves of 150 billion to 200 billion barrels rank third or fourth globally. If Trump had aimed to secure Iranian oil, he would have made the first move before Iran proposed anything. At least for now, oil does not appear to be among the primary objectives of the Iran war.

The U.S. has been blocking Iranian crude from global markets through export sanctions. This is why China, importing 80% to 90% of Iran's oil exports, has become its largest customer. Moreover, America's success in achieving "oil independence" means Iranian crude holds little appeal for Washington.

Is Gas-Driven Inflation Coming?

The second factor is natural gas. Analysts are forecasting international oil prices will rise above $100 due to this crisis, as Iran has taken the unprecedented step of actually blockading the Strait of Hormuz—the world's oil "lifeline." But natural gas prices are climbing even faster. Qatar's North Field at Ras Laffan, which accounts for one-fifth of global LNG supply, has temporarily halted production after an Iranian drone attack. While crude oil prices face concerns over transportation disruptions, natural gas confronts both transportation and supply problems simultaneously. Reports indicate overseas shipowners and brokers are quoting LNG charter rates at twice previous levels, fueling fears that gas-driven inflation could spread.

Bloomberg reported: "If the shutdown [of Qatar's gas fields] lasts weeks or even months, Europe and Asia will have to compete for LNG volumes." This feels familiar. When Russia invaded Ukraine in February 2022 and cut gas supplies to Europe, the U.S. emerged as an alternative supplier and directed LNG exports to Europe. The ripple effect sent gas prices soaring across Asia, including South Korea. A repeat scenario is possible. Of course, LNG markets rely heavily on long-term contracts of up to 30 years rather than spot purchases, which serves as a buffer. Last year, Qatar accounted for 15% of LNG imports to South Korea and remains a key supplier, though import diversification has progressed with Australia (14.67 million tons) and Malaysia (7.52 million tons). However, if supply volumes become absolutely insufficient and prices surge, the shock to gas markets could be severe. These projections assume prolonged production disruptions at Qatar's gas fields.

Oil Prices More 'Fatal' Than Iranian Retaliation