Trump's jawboning of oil prices has doomed his party, and his presidency
It's too late to turn the oil tanker, Donnie
Donald Trump enjoys few things more than manipulating current events by posting on Truth Social. Whether making government policy or firing cabinet members, Trump takes particular joy in launching these verbal cruise missiles at anyone who dares to defy his imperial will. Regardless of how deranged, insulting or hate-mongering his posts have been, Teflon Don has always been immune to any significant consequences. Until now, that is.
Shortly after the Islamic Republic of Iran (IRI) closed the Strait of Hormuz, plunging the whole world into an unprecedented energy crisis, Trump realised he could calm the oil futures markets by announcing that an agreement with the IRI was imminent. This worked so well that he has, to date, done so on 40 separate occasions. This “jawboning” is one of the factors that has kept oil prices much lower than analysts had forecast.
To be fair, there are many other factors at play in the market. The fact that China more or less halted all oil imports after the strait closed has had a huge impact on available supply. So far, the strait has only been closed during the global “shoulder season” for oil demand, the northern spring, meaning fewer barrels of oil are needed to supply the world’s demand. Around 80% of the world’s population lives in the northern hemisphere, and they tend to drive a lot more during their summer, which naturally drives up demand and thus prices.
Then there is the fact that the global oil market was suffering from a glut of supply in late 2025 and early 2026. There was so much extra oil supply relative to demand that governments and corporations took the opportunity to buy up excess oil and stockpile it for when prices eventually rose. This has further buffered the world against the shock of losing 20% of its oil supply overnight.
The key to Trump’s downfall is, ironically, the USA’s Strategic Petroleum Reserve (SPR), a stockpile of hundreds of millions of barrels of oil stored in natural salt caves (yes, really) that can be tapped whenever the USA’s oil supplies are disrupted. So far, the Trump administration has withdrawn 65 million barrels of oil from the SPR, leaving 349 million barrels remaining in the total stockpile.
While this might sound perfectly reasonable and sensible in theory, the world is in an unprecedented oil supply crisis, after all, the reality is actually quite insane. America’s government has been withdrawing millions of barrels of oil from the SPR while, at the same time, millions of barrels of oil, or their equivalent in refined products, have been flowing out of the USA, mainly to Asia and Europe.
This is only happening because Trump’s rhetoric has kept the price of oil inside the USA artificially low, which incentivises oil producers to sell oil to customers who offer a higher price, particularly in countries like Japan and Australia, which have historically relied very heavily on oil flowing from the Persian Gulf. If Trump had resisted the urge to interfere in markets for short-term political benefit, then prices in the USA would have risen sufficiently for US oil buyers to outbid Asian and European buyers.
Prices are supposed to be a signal of relative scarcity. When something is in short supply, when demand for it is abnormally high, or when some combination of the two occurs, prices should rise to the point that both the suppliers and the users of that thing react accordingly. By intentionally disrupting this price signal, Trump has sown the seeds of his own doom.
The mechanism of that impending doom is as follows: the glut of oil that built up in 2025 will be entirely used up by the beginning of July, and the SPR is hard-limited to a minimum of 250 million barrels. There is, essentially, no more “spare” oil available, and so the 16 million barrels of oil that normally flow out of the Gulf every day, as well as the 5 million barrels’ worth of refined products, like petrol and diesel, now need to be removed from demand.
That removal process, called “demand destruction”, typically happens in one of two ways: prices rise so high that people simply cannot afford to use as much as usual, or governments intervene to ration usage. There is no way the American populace will stomach government-mandated rationing, I can already see the AR-15s being loaded, and so prices are going to rise dramatically and precipitously.
Given that Trump’s approval ratings are already at record lows, and that his worst scores are for his handling of “gas” prices, this kind of price increase will almost guarantee a rout of Republican candidates in the midterm election cycle in November. This is made even more likely by the fact that Trump has intentionally, and with great malice of forethought, packed the election with his most abject loyalists. This election is a referendum on Trump, and the general sentiment will be, “No thank you, we have had enough of your clownish bullshit.”
All of the above will happen regardless of when the Strait of Hormuz opens. It could open tomorrow and all of the pain would still be baked in for the next 6 to 12 months. Trump may try to implement export controls on US oil producers, but their lobby is powerful enough to literally go around Trump and compel Congress to block any such controls. The oil lobby is truly bipartisan. Both Democrats and Republicans will dance to its tune should it decide to take up the fiddle.
And so, after decades of skating through literally thousands of scandals, any one of which would have led to Obama being impeached, he has finally encountered a political brick wall. Unlike the culture wars, his endless sex scandals, or his blatant graft, ordinary Americans care about the price of petrol, and they cannot be convinced by a Truth Social post that it is lower than they believe.
We should take a moment to savour the irony of Trump torpedoing his own presidency by starting a war to distract his base from the Epstein files, thus creating a massive supply shock that has pushed inflation higher than under Joe Biden. So, as far as election promises go, he is currently 0 for 3, and his fellow Americans are ill-disposed to let him get away with it. It could not have happened to a nicer guy.
I need to acknowledge The Money Matters Network and Matt Smith for both facts and inspiration for this piece.