Starting a war in the Persian Gulf, a region that produces roughly a third of the world’s oil, was bound to send shock waves through global markets.

Yet the Trump administration, which joined Israel in launching a ruthless assault on Iran last month, has seemed unprepared for the Islamic Republic’s ability to hit back through threats and attacks on shipping that have cut the flow of tankers to a trickle.  

This response is creating a mammoth disruption of global supplies of oil as well as natural gas, with potentially large consequences for consumers and businesses as well as geopolitical ramifications. “I’ve been absolutely flabbergasted that the US has not been a little bit more planned as to how they would deal with this very, very predictable situation,” said Bill Farren-Price, a senior research fellow at the Oxford Institute for Energy Studies on a recent podcast.

The administration seemed to calculate that the large increases in oil and natural gas production in the United States in recent years would somehow blunt the consequences of a conflict in the Gulf.

Due to advances in fracking and other drilling techniques, the United States has become the world’s largest producer of oil as well as the largest exporter of natural gas.

Current Issue

May 2026 Issue

“The world is very well-supplied with oil right now,” Energy Secretary Chris Wright told CNBC last month as Trump was building up forces in the Gulf. “It gives President Trump more leverage in his political actions not to worry about a crazy spike in oil prices.”

Yet those large supplies have not been enough of a buffer to soothe markets after the Iranians effectively closed the Strait of Hormuz, the narrow gauntlet through which most of the oil and natural gas exports from the Persian Gulf region flow on their way to customers. “If this takes a long time, that will have a serious impact on the global economy,” Amin Nasser, chief executive of Saudi Aramco, the Saudi national company that is the world’s largest oil producer, said on a call with financial analysts on Tuesday.

On Monday, mounting fears of prolonged conflict and resulting disruption led to a spike in international crude oil prices to nearly $120 a barrel, the highest level since the aftermath of Russia’s 2022 invasion of Ukraine.

That surge seemed to worry Trump or, at least, gain his attention. The war is “very complete, pretty much,” he told CBS News.

That pronouncement helped lower prices, but they remain about 25 percent above prewar levels. Because oil is a globally traded commodity, the leap in crude oil costs translates into higher prices for American consumers for refined products like gasoline and jet fuel. The average price of gasoline in the United States surged 17 percent in the week following the onset of war to $3.45 a gallon, according to GasBuddy, a consumer website.

The consequences could be more serious for Europe, which has still not completely recovered from the price rises that resulted from the slashing of natural gas flows from Russia as a result of the war in Ukraine. Europe largely replaced Russian natural gas with imports from elsewhere, especially the United States. Even before the war with Iran, some European analysts were questioning the wisdom of this arrangement, given the administration’s skepticism about Europe and attraction to far-right parties there.

Trump’s war is also in some respects aiding Russia. Moscow will rake in higher oil and gas revenues to support its war effort. Trump has also given India, one of Russia’s largest customers, a temporary waiver to continue importing its crude.

The war could also prove damaging to the aspirations of the petroleum producers around the Gulf like Qatar, Saudi Arabia, and the United Arab Emirates, which have become close allies and business partners of Trump since the beginning of his second term. Qatar, one of the world’s largest natural gas exporters, has temporarily shut down facilities for liquefying gas after Iranian attacks. Saudi Arabia has the ability to pipe a large portion of its production to a terminal on its western coast, away from Iran’s reach, but neighbors like Qatar, Kuwait, and Iraq have little flexibility.

Trump seems to be betting that his and Israel’s brutal pummeling of the Islamic Republic will make it safer for these countries to pursue their ambitions to parlay their petroleum wealth into other sectors like financial services and tourism.

But the aftereffects of the drone attacks on tourist hubs like Dubai and the disruption to air travel may linger. And what form of government and society take shape in Iran, whose population of just over 90 million dwarfs those of its Arab neighbors, remains to be seen.