Trump claims ‘a small price to pay’ as oil rockets through $100
Price of crude reaches landmark last exceeded during invasion of Ukraine
Jonathan Leake Energy Editor. Matt Oliver Industry Editor. Akhtar MakoiiDonald Trump claimed surging oil prices were “a small price to pay” for the eradication of Iran’s nuclear programme as the price of crude blew through $100 for the first time in four year.
The US President, posting on his Truth Social platform, said on Sunday that prices would fall again once the conflict was over as the crisis entered its 10th day.
But analysts warned that the surge in oil prices - which have now doubled in just three months - threatened to send petrol prices soaring for drivers in America and Europe.
Mr Trump wrote: “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 U.S.A., and World, Safety and Peace.
“ONLY FOOLS WOULD THINK DIFFERENTLY!”
His remarks came minutes after the price of crude on Sunday evening blew past a landmark it last exceeded during the invasion of Ukraine. US crude hit $110 per barrel, an increase of almost a fifth since Friday alone.
Fears of inflation have gripped markets with the critical Strait of Hormuz disrupted for nine days so far. A quarter of global oil and gas supply depends on the narrow waterway.
On Sunday, the US energy secretary Chris Wright said the disruption was likely to last for weeks. He said one tanker had transited the Strait of Hormuz this weekend, compared with scores on a normal day.
Emmanuel Macron on Sunday became the first Western leader to appeal directly to the president of Iran to reopen the Strait of Hormuz.
Traders had previously predicted the oil price would leap from the $92 it ended on Friday, as the threat of a prolonged shutdown increases.
Wall Street analysts at Goldman Sachs, one of the world’s largest investment banks, over the weekend separately warned oil could hit around $150 per barrel if the crisis hasn’t receded by the end of this month.
It means the cost of filling a family car with petrol also risks rising above the £100 mark for the first time since the invasion of Ukraine.
In extreme and unprecedented scenarios, some oil traders have warned that the price of crude could soar to as much as $250 per barrel.
Unprecedented price rises
Iran chose the son of the late ayatollah Ali Khamenei as the country’s next supreme leader, Iranian state media announced on Sunday night.
Clerics chose Mojtaba Khamenei, 56, a mid-ranking hardliner, signalling a willingness to continue the war with the US. The choice is likely to anger Donald Trump.
Mr Trump has previously said Khamenei is a “lightweight” and added on Sunday that any new leader who does not have his approval will “not last long”.
The new supreme leader was elected by informal consultations among 88 clerics of the Assembly of Experts over nine days.
Assembly of Experts member Hosseinali Eshkevari, earlier in the day, promised that Khamenei’s name “will continue” after the council that elects a new leader said it has made its choice.
Khamenei is close to the IRGC, the powerful elite military force close to the hardcore establishment of the Islamic Republic.
Members said Israeli and US air strikes had prevented them from convening an in-person session to formalise the choice in official minutes.
There have been few signs of de-escalation of the conflict from Washington. Mr Trump said that “everything is on the table” in response to questions about whether he would send in commandos to seize Iran’s uranium stockpile.
Israeli and American forces struck oil depots in and around Tehran, sending plumes of smoke billowing across the capital and streams of burning petrol running through the streets. Iran said it had expanded its list of targets in retaliation, adding that civilian infrastructure could be hit in return.
The strikes reportedly sparked tensions with the US, marking the first major disagreement between the allies since the war began on Feb 28.
The Israel Defence Forces (IDF) hit 30 terminals on Saturday, claiming they were used by the regime to “supply fuel to different consumers, including its military organs”.
However, US officials fear the move could backfire, according to Axios, by rallying Iranian citizens to support the regime and driving up the cost of oil. Mr Trump has been under pressure at home over rising prices at the pump.
“We don’t think it was a good idea,” a senior US official said. The message sent to Israel was essentially “WTF”, according to an Israeli official.
Although the US was notified ahead of the strikes, it is said to have been surprised by how wide-ranging the attacks on the fuel depots were.
A spokesman for the Iranian military warned on Saturday that if strikes continued, it could start targeting fuel and energy infrastructure, potentially pushing oil prices up to $200 a barrel.
Karoline Leavitt, the White House press secretary, on Sunday admitted there had been a “slight increase” in oil prices but insisted this would drop once Iran’s leadership was ousted.
“This is a short-term disruption for the long-term gain of taking out the rogue Iranian terrorist regime and finally ending their restriction of the free flow of energy in the Middle East and in the Strait of Hormuz,” she told Fox News.
The US is also considering an attack on Kharg Island, a lynchpin of Iran’s own oil industry
Greg Newman, of London-based trading house Onyx Capital Group, warned that prolonged disruption could lead to unprecedented rises in the oil price that would “very likely” push the cost of filling up a car with petrol above £100.
He said: “Iran has targeted specific energy infrastructure, and the key choke points which are critical to global benchmark price formation.
“We can’t see a price ceiling that’s even close if this scenario is maintained. $150 for real delivered oil is conservative. $250 is more reasonable.”
The highest price on record is $147.50 per barrel, reached in 2008. But Mr Newman warned that the war with Iran could send oil to $250 per barrel in a worst-case scenario. That level would be almost certain to trigger a global economic recession by crushing energy demand.
Gulf states have been slashing production of oil and gas as their storage begins to fill up. If they are forced to fully shut off wells because they cannot export, the disruption is likely to last weeks beyond any reopening of the Strait of Hormuz.
Mr Wright sought to calm Americans who are already seeing prices at the pumps begin to climb. He said: “You’re seeing a little bit of fear premium in the marketplace. But the world is not short of oil today or natural gas.”
US officials defended a decision to temporarily lift some sanctions on Russian oil in an effort to ease some of the pressures on oil supply.
Iraq on Sunday became the third country to halt exports completely, after Kuwait and Qatar, with Saudi Arabia and the United Arab Emirates both operating at reduced capacity.
UK oil industry sources on Sunday insisted there were no current concerns about a supply crisis, as the global market was operating on a surplus before the crisis and refiners in Europe tend to produce more than is needed locally.
It is thought that jet fuel and diesel are potentially of concern; however, given that the UK imports large quantities of both from abroad.
The Government is understood to be monitoring the situation closely.
Sir Keir Starmer has spoken to Donald Trump for the first time since the president criticised him for not supporting strikes on Iran.
The two leaders previously had a conversation hours after the Prime Minister denied permission for US planes to take off from British bases. The refusal prompted Mr Trump to tell The Telegraph he was “very disappointed” in Sir Keir.
On Sunday, a spokesman said the leaders began by discussing the latest situation in the Middle East and the military cooperation between the UK and US through the use of RAF bases in support of the collective self-defence of partners in the region.
On Monday, Sir Keir is expected to visit a community centre in London and is expected to say people should be “rightly worried” about the impact rising oil prices could have on the cost of living.
He will say: “No matter the headwinds, supporting working people and their families with the cost of living is always top of my mind.”
In recent days, ministers have vowed to “double down” on the Government’s clean energy plans to make Britain less dependent on fossil fuels, although this will do little to provide relief in the short-term.
Howard Cox, founder of campaign group FairFuelUK, urged ministers to be vigilant against “profiteering” by forecourts and urged Rachel Reeves, the Chancellor, to slash fuel duty to “ensure inflation is not hit hard and economic growth is not slowed to a negative position.”
He added: “If oil climbs to above $150, we are in recession territory, with a sharp rise in inflation, lost jobs, logistics industry decimated, higher interest rates, increased borrowing, and small businesses and sole traders in economic freefall.”
In the Ukraine crisis, oil peaked at around $120 per barrel and the price of unleaded petrol hit a high of 191p per litre in the UK, according to the RAC – taking the cost of filling a typical family car to about £105.
After the bombings in Tehran, video footage showed flames rising from several locations across the capital of 10 million people.
“The bombardment of Tehran tonight is apocalyptic,” one resident said. “From every corner of the city a light rises, and the whole city turns red. All of Tehran’s oil storage tanks were hit.”