Trump Says Oil Surge Is 'Very Small Price To Pay' As Crude Tops $100 A Barrel Hints At When Prices Could Fall

(MENAFN- Live Mint) Crude oil prices rocketed past $100 a barrel on Sunday for the first time since Russia’s invasion of Ukraine in 2022, as the ongoing US military campaign against Iran strangled one of the world’s most critical energy chokepoints and forced major Gulf producers to dramatically curtail output.

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West Texas Intermediate, the US benchmark, surged 17%, or $15.32, to $106.22 a barrel by Sunday, while global benchmark Brent crude advanced 15%, or $14.28, to $106.92. By later in the day, US oil prices had extended gains to more than 23% on the session, trading above $111 a barrel. The milestone means crude has effectively doubled within three months from its December low - a pace of appreciation without precedent in the futures market’s history dating to 1983.

Trump Says Oil Will Drop ‘Rapidly’ Once Iran Nuclear Threat Is Eliminated

Shortly after prices breached the psychologically significant $100 threshold at the open of Sunday evening’s trading session, President Donald Trump took to Truth Social to address surging energy costs and, notably, to offer a timeline for relief.

“Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace,” Trump wrote.“ONLY FOOLS WOULD THINK DIFFERENTLY! President DJT.”

The post was notable both for its defiant tone and for its implicit signal that the administration views the price shock as temporary and directly tied to the military campaign’s duration, framing the energy crisis as an acceptable cost of eliminating what it describes as an existential security threat.

Strait of Hormuz Closure Triggers Historic Supply Shock

The precipitating cause of the price spiral is the effective closure of the Strait of Hormuz, the narrow waterway through which approximately 20% of the world’s oil consumption is exported. Iranian threats against commercial tankers have made insurers and shipping companies unwilling to transit the passage, creating a cascading supply disruption that has left Gulf producers with oil they cannot move and storage facilities rapidly filling to capacity.

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The consequences for global output have been severe. Iraq, OPEC 's second-largest producer, has seen production from its three principal southern oilfields collapse by 70%, falling to 1.3 million barrels per day from 4.3 million barrels per day before the conflict began, according to three industry officials who spoke to Reuters on Sunday.

Kuwait, OPEC’s fifth-largest producer, announced precautionary cuts to both production and refinery output on Saturday, citing what the state-owned Kuwait Petroleum Corporation described as “Iranian threats against safe passage of ships through the Strait of Hormuz.” The corporation did not specify the scale of the reductions.

The United Arab Emirates, OPEC’s third-largest producer, said Saturday that it is “carefully managing offshore production levels to address storage requirements,” with state energy company ADNOC noting that onshore operations were continuing as normal.

OPEC Producers Running Out of Storage as Tankers Pile Up

The production cuts from Iraq, Kuwait and the UA are not a strategic choice so much as a logistical necessity. With tankers unable or unwilling to navigate the Strait, oil has nowhere to go, and storage infrastructure across the Gulf is filling rapidly. The result is a supply crisis that is self-reinforcing: the longer the waterway remains closed, the more producers are forced to scale back, and the higher prices climb on global markets.

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The last time crude oil surged above $100 a barrel, the catalyst was Russia’s invasion of Ukraine in February 2022. That episode proved relatively brief. Whether the current spike follows a similar trajectory depends almost entirely on how quickly, and on what terms, the US-Iran conflict concludes.

Iran Names New Supreme Leader as War Continues

On the Iranian side, the Islamic Republic moved to signal continuity of leadership, with reports indicating that Mojtaba Khamenei, son of Ayatollah Ali Khamenei, has been named as the country’s new supreme leader. The development offered little indication that Tehran is moving towards a diplomatic resolution, even as economic pressure mounts on both sides.

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For American consumers and businesses, the trajectory of oil prices in the coming weeks will hinge on whether Trump’s prediction, that prices will drop “rapidly” once the Iran nuclear threat is neutralised, proves accurate, or whether a protracted conflict extends the energy shock into a broader economic reckoning.

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