The International Energy Agency warned on Friday that the Iran war had set off “the largest supply disruption in the history of the global oil market.” Reports predict a global energy crisis. Alongside these forecasts, the Trump administration has been criticized for underestimating the war’s impact on oil supply.
Neither the doomsday scenarios nor the White House critics are correct, said Elai Rettig, assistant professor in the Department of Political Studies at Israel’s Bar-Ilan University, and a senior researcher at the Begin-Sadat Center for Strategic Studies (BESA Center), who specializes in energy policy.
The Trump administration is doing an excellent job keeping oil prices in check, and was fully aware that Iran would try to close the Strait of Hormuz, a key chokepoint through which transits 20% of the world’s oil supply, he said.
“The headlines allude to this idea that the Trump administration was completely caught off guard; that it didn’t know the Strait of Hormuz was going to be closed. That doesn’t make any sense,” Rettig told JNS. “Every war simulation I’ve ever been in—at the INSS [Institute for National Security Studies], at the BESA Center, in the United States—they all had the Strait of Hormuz as one of the key developments, especially because Iran itself kept saying, ‘We will close the Strait once we are attacked.’”
War simulations forecast $200-a-barrel oil (the very number an Iranian military spokesman quoted on March 11 when warning of the damage Iran would visit on the world economy in retaliation for the U.S.-Israel attack), he said. No one predicted three weeks into a closure of the Strait that prices would still hover around $100, he added. “If the war continues on schedule, more or less six to eight weeks, then the U.S. has succeeded beyond the dreams of war planners,” he said. “People don’t appreciate just how great this war is going.”
The reasons for the U.S. administration’s success are threefold: 1) there was an oil glut going into the war; 2) countries had stocked their strategic oil reserves; 3) the Strait isn’t hermetically sealed. “Coming into the war, the oil market was very well prepared for a two-to-three-month war,” said Rettig.
The International Energy Agency, a Paris-based intergovernmental energy watchdog, estimated in January that oil supply outpaced consumption by roughly 3 million barrels per day. Sanctions against Iran and Russia left large volumes of oil, as much as 200 million barrels, stranded at sea, just awaiting buyers.
The U.S. Treasury lifted sanctions on Iran’s floating oil on March 20. “In essence, we will be using the Iranian barrels against Tehran to keep the price down as we continue Operation Epic Fury,” said Treasury Secretary Scott Bessent on Friday. The move could free up about 140 million barrels of oil.
Second, countries had months to prepare strategic stockpiles. Not only did the United States refresh its Strategic Petroleum Reserve, but China, too, aggressively built up its own after the 12-day war in June 2025, when Israel first struck Iran’s nuclear and ballistic missile facilities. Outside estimates suggest China holds about 200 days’ worth of supply. Japan maintains similar levels ever since the Arab oil embargo of the 1970s. Members of the International Energy Agency (IEA) and OECD (the Organization for Economic Co-operation and Development) are required to hold at least 90 days of reserves.
On March 11, to help tamp down oil prices, IEA’s 32 member countries agreed unanimously to release 400 million barrels of emergency reserves. The United States is contributing 170 million barrels to that total.
Third, the Strait of Hormuz has not been completely shuttered. Although the strait normally handles an average of 20 million barrels per day, nearly half, or roughly 9 million barrels, still makes its way to outside markets via two pipelines that bypass the strait, Rettig explained.
The 746-mile East-West Pipeline crosses Saudi Arabia. On March 11, it started to work at full capacity (7 million barrels per day), bringing oil to a port on the Red Sea. In the United Arab Emirates, the 248-mile Habshan–Fujairah oil pipeline brings oil to a point on the Gulf of Oman. Its capacity is 1.8 million barrels a day.
Iran also hasn’t stopped shipping oil, which it sells to its allies, mainly China. The United States permits that oil to pass as it restrains Iran from going all-out to block the strait. “It gives them something to lose,” Rettig explained.
Both sides have been careful about escalating. While Iran has attacked oil facilities, it has exercised restraint in terms of what it hits, avoiding targeting oil production. “Media headlines are often hysterical after an Iran strike. Then a few hours go by and we realize it was just an oil depot that was hit,” said Rettig. “Iran is careful what it strikes.” As a result, when hostilities end, neighboring states will be able to quickly ramp up production.
The United States has similarly refrained from bombing Iran’s energy facilities or taking over Kharg island, through which pass 90% of Iran’s crude exports. When Israel hit Iran’s South Pars Field, Iran retaliated against Qatari and Saudi energy facilities. Trump immediately distanced the U.S. from the Israeli attack, claiming ignorance and warning Iran not to try it again. It demonstrates that neither side wants to go too far on the energy front for the time being.
Rettig noted that the site Israel hit was for Iran’s domestic natural gas production. The goal was to make it difficult for Iran to generate electricity. It didn’t impact oil exports.
“The U.S. plan is to keep oil prices manageable while it continues to degrade Iran’s capacity. That strategy is working,” he said. Iran is losing and the price of oil remains under control. The United States, at a time of its choosing, once it feels Iran’s capabilities have been degraded enough, can open the strait by force, he said.
The fact that most Gulf oil heads to Asian states raises the question as to why U.S. prices are affected at all by the Hormuz closing. Rettig explained that much of it is perception. U.S. prices at the pump jump quickly mainly due to risk premiums, a surcharge tacked on to the base price of fuel that adjusts to geopolitical risk and other uncertainties, he said.
“Oil prices are going up and down because of the risk premium. That’s why headlines, or the president’s statements, affect price. Trump says this or that and oil prices go up and down, even though nothing physically has happened,” he explained.
Another reason that higher global prices ripple into the U.S. market is because American oil companies trade internationally. They aren’t limited to selling in the United States. Asian buyers, facing reduced Middle East supply, bid aggressively for barrels from U.S. producers. It may sound unpatriotic, said Rettig, but U.S. exporters are private companies and as such have the right to sell to whomever offers the best price, whether it’s India or Australia.
While there has been talk of an export ban to shield American consumers from price shocks, Rettig was skeptical. It would damage America’s reputation as a reliable global supplier. The United States would lose the trust of its customers if it blocked sales just when its oil is most needed, he said.
The good news is that the United States has ample oil supplies. It’s producing large volumes domestically and importing significant amounts from Canada, Mexico, and, most recently, Venezuela, he said.
Reports often assert that high oil and gas prices will negatively impact the Republicans’ mid-term election chances. Rettig said this, too, is perception. It’s a “myth” that rising oil prices invariably hurts the party in power. It’s not “statistically accurate,” he said. Historical data shows that presidents can both win and lose elections amid high fuel costs. He noted that former President Barack Obama secured a second term despite elevated gas prices.
