White House Scrambles for New Measures as Surging Energy Prices From Iran Conflict Threaten U.S. Economy

BY MIRABEL ODETA

The White House has begun pressing federal agencies to intensify efforts aimed at dealing with rapidly rising energy prices linked to the escalating conflict involving Iran, a sign that officials believe the steps taken so far may not be sufficient to stabilize markets. According to people familiar with internal discussions, senior administration officials have requested additional proposals from several key departments as concerns grow that oil and gasoline costs could continue climbing in the weeks ahead.

Officials from the Departments of Energy, Transportation, and Treasury, along with the Environmental Protection Agency, have been asked to present more policy options that could help contain the surge in fuel prices. The focus of these discussions is on measures that President Donald Trump could enact without needing approval from Congress, allowing the administration to move more quickly if market pressures worsen. The request reflects a growing sense inside the administration that the current strategy may need to be expanded if the energy market continues to tighten.

The push for new options also highlights political concerns surrounding the economic impact of higher fuel costs. Analysts warn that sustained increases in gasoline prices could create political challenges for the president and his party ahead of the November midterm elections, when control of Congress will be decided. Rising prices at the pump are often felt immediately by voters, and historically they have influenced public sentiment about economic management.

White House spokeswoman Taylor Rogers said the administration is closely coordinating across agencies to address the situation and emphasized that planning for market stability had begun well before the current crisis intensified. She stated that the president and his energy advisers have maintained a long-term strategy designed to keep oil prices stable and that officials are continuing to review credible options that could be deployed if necessary.

Pressure on global energy markets has intensified in recent days. U.S. and international crude oil futures climbed above $90 per barrel on Friday, reflecting growing fears about supply disruptions in the Middle East. U.S. crude prices alone have risen more than 12 percent as shipments through the region remain severely restricted.

A major factor behind the surge is the effective closure of the Strait of Hormuz, a critical maritime passage through which a large portion of the world’s oil supply typically flows. The disruption follows the expansion of the conflict involving the United States, Israel, and Iran, raising concerns that global energy supply chains could remain unstable for an extended period.

American consumers are already feeling the impact of these developments. Gasoline prices across the United States have jumped significantly in recent weeks, reaching levels not seen since late 2024. The national average for regular unleaded gasoline has climbed above $3.30 per gallon, while diesel prices have risen even more sharply, reaching about $4.26 per gallon. The increases are putting pressure on households and businesses alike, particularly industries such as transportation and logistics that rely heavily on fuel.

Despite the urgency of the situation, the administration has so far taken a cautious approach to intervening in energy markets. Officials are concerned that overly aggressive actions could have unintended consequences, including disrupting supply chains or triggering volatility in financial markets. Policymakers believe that any large-scale intervention must be carefully calibrated to ensure it actually reduces fuel costs rather than amplifying uncertainty. Some advisers worry that if bold measures fail to bring down gasoline prices quickly, the political and economic backlash could be significant.

Among the ideas under consideration are temporary steps designed to ease fuel costs for consumers and increase supply flexibility. One option that has been discussed is a federal gasoline tax holiday, which could provide short-term relief at the pump. Another proposal involves easing environmental regulations governing summer gasoline blends, which could allow refiners to produce fuel containing higher percentages of ethanol and potentially expand supply during peak driving season.

The Treasury Department has also examined more complex financial strategies aimed at influencing energy markets. One proposal being studied involves the possible use of the oil futures market as a mechanism to stabilize prices or signal confidence to traders. However, officials have not indicated that such a move is imminent, and discussions remain largely exploratory.

In addition to domestic measures, the administration has attempted to address the supply disruptions directly affecting global energy shipments. Earlier in the week, President Trump directed the U.S. International Development Finance Corporation to provide insurance coverage protecting maritime trade in the Persian Gulf against losses caused by political instability or conflict. The step was intended to reassure shipping companies and encourage the continued movement of oil and liquefied natural gas through the region.

The initiative came after tanker traffic through the Strait of Hormuz slowed dramatically as shipping companies assessed the risks posed by the escalating conflict. The narrow waterway is considered one of the most important chokepoints in global energy trade, carrying roughly one-fifth of the world’s daily oil supply under normal circumstances. Any prolonged disruption to traffic through the strait has the potential to ripple through international markets and drive prices higher worldwide.

However, market analysts have reacted cautiously to the administration’s efforts. Some experts argue that financial guarantees alone may not be enough to convince shipping companies to resume normal operations if security conditions in the region continue to deteriorate. Tanker operators must also weigh the physical risks to vessels and crews, as well as potential damage to cargo, when deciding whether to sail through areas experiencing military tensions.

Seeking to strengthen confidence further, the administration announced on Friday that it would provide up to $20 billion in reinsurance coverage for potential losses tied to shipping operations in the Gulf region. The move is designed to backstop insurers and reassure energy transport companies that financial protections are in place while the conflict with Iran continues.

Even with these efforts, uncertainty remains high across global energy markets. Traders and policymakers alike are closely watching developments in the Middle East, where any further escalation could push oil prices even higher. For the White House, the challenge now lies in balancing immediate economic concerns at home with the complex geopolitical factors driving the crisis abroad.