Oil prices jumped this week as traders reacted to increased hostilities between Iran and Israel, and the emerging possibility that the United States might enter the conflict. While both stock and oil markets on Monday were calm, thanks to rumors that Iran might negotiate an end to its nuclear program, resumed hostilities and a ramping up of aggressive talk from President Trump soon pushed stocks down and oil up.
Oil surges past $75 as Trump talks tough, Hormuz heats up — and Biden’s blunders come home to roost https://t.co/1oRo2LEI3B pic.twitter.com/2V5RpZslmK
— Liz Peek (@lizpeek) June 18, 2025
West Texas Intermediate oil is currently trading at just below $75 per barrel; that is a big leap from the low of $57 on May 5. The rise (oil is also now up over 6% compared to last year) is not good for the U.S. economy, or for the GOP. Declining energy prices have been at the heart of cooling inflation, which has helped boost real wages; a reversal could hit Republicans hard in the midterms. In May, the Consumer Price Index rose 0.1 percent, and was up only 2.4 percent over the last 12 months; a 3.5% drop in energy and 12% decline in gasoline prices offset increases in other items.
We are not on the brink of an oil crisis; the world has been awash in crude thanks to Saudi Arabia demanding OPEC+ keep production levels high. But crude prices spiked when Iran vaguely threatened closing the Strait of Hormuz, through which about 30% of global oil shipments pass. Most of that oil and refined products head to Asia, and buyers in China, India and Japan. Closing the strait would send oil princes much higher.
The Hormuz Strait could even close accidentally, as an unintentional fallout from the war. Overnight two tankers collided and caught fire in the narrow waterway; their navigation systems had apparently been jammed by electronic devices presumably meant to thwart missiles and drones.
It could happen again, reminding us that one of the most important protections against an oil supply interruption for Americans has been compromised.
As oil prices gyrate, we remember that President Joe Biden drained our Strategic Petroleum Reserve to record-low levels for personal political gain. With his polling being crushed by high inflation and in particular as gasoline hit a record $5 per gallon in June 2022, on the cusp of the midterm elections, Biden sold off an unprecedented 180 million barrels from the SPR, 40% of the total reserve. Biden blamed a spike in oil prices to the war in Ukraine, but his own energy policies, which stupidly sought to stomp out fossil fuels like oil and natural gas, were also to blame. Biden did everything he could to slow oil drilling permits and raise costs for producers, with the result that the surge in drilling and production that had occurred under President Trump began to slow.
At the end of 2019, we had 1,083 rigs running in the U.S.; by the end of 2024, there were only 622.
Nearly everything Joe Biden did on energy policy – including draining our reserves and throwing hundreds of billions of taxpayer dollars at windmills and other “green” projects – was done for political gain. It’s a shameful record.
At its peak, the reserve held 727 million barrels of oil; today the stockpile stands at 402M, up from 370M one year ago. Is it enough? Let’s hope we never find out.
