President Joe Biden's comments on potential U.S. support for Israeli strikes on Iranian oil facilities have raised concerns about the future of global oil prices. His remarks on Thursday led to a sharp spike in the U.S. oil benchmark, The Hill reported.
On Thursday, in response to a question about whether the U.S. would support such actions, Biden replied during a White House briefing, “We’re discussing that,” though he quickly added, “There’s nothing going to happen today.”
Following Biden’s remarks, West Texas Intermediate (WTI), the U.S. oil benchmark, surged by 5.5%. The sudden spike highlighted the market’s sensitivity to geopolitical developments, particularly in the Middle East, a key region for global oil production.
On Friday, Biden appeared more direct in discouraging potential attacks on Iranian oil infrastructure. He stated, “The Israelis have not concluded what they’re going to do in terms of a strike. That’s under discussion. If I were in their shoes, I’d be thinking about other alternatives than striking oil fields.”
The president’s comments come amid an intensifying conflict in the region following Israel’s retaliation to the Oct. 7 attacks.
While Israeli bombardments of Gaza have had limited impacts on the oil market over the past year, Biden’s remarks signal a new layer of complexity in the already volatile situation. The region has seen further escalation, including an Israeli incursion into Lebanon that resulted in the death of Hezbollah leader Hassan Nasrallah and a retaliatory missile strike by Iran earlier this week.
The potential for Israeli actions to impact Iran’s oil production could have far-reaching consequences. Iran, the world’s seventh-largest oil producer, pumps around 4 million barrels of oil per day. While the U.S. does not directly rely on Iranian oil, the global nature of the oil market means any disruption in Iranian supply could still impact American consumers.
“If that market lost supplies of Iranian oil, it affects the consumer because worldwide prices rise, and the U.S. has become a major supplier to the world,” said Andy Lipow, president of consulting firm Lipow Oil Associates, LLC.
Lipow emphasized that the U.S. economy is tied to global oil prices, and any disruption in the flow of Iranian oil would likely lead to higher prices at American gas pumps.
The oil market has been relatively stable in the past year despite regional conflicts, particularly when compared to the significant price spikes following Russia’s 2022 invasion of Ukraine. That conflict sent gas prices soaring to record highs across the globe.
However, with tensions in the Middle East intensifying and the possibility of direct impacts on Iranian oil production, experts warn that American consumers could see renewed volatility in fuel costs if the situation escalates further.