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You’re going to pay a lot more at the gas station if Trump kills the Iran deal

Experts say gas prices could surge well past $3 a gallon.

Joe Raedle/Getty Images

Gas prices across the country could soon spike, and for an unexpected reason: President Trump’s apparent plan to pull the US out of the Iran nuclear deal.

Trump will be making an announcement on Tuesday afternoon on whether he will be renewing the Iran deal, the 2015 agreement in which the US lifted sanctions on Tehran in exchange for the country downsizing its nuclear program. Trump has warned that he’ll scrap the deal and reimpose punishing sanctions on Iran unless Europe helps “fix the terrible flaws” in the agreement. No such fix is in sight, and right now many foreign policy experts — and the French president — think Trump is really about to pull the US out of the agreement.

Reimposing sanctions on Iran would infuriate the US’s allies and deal a serious blow to Iran’s economy, and could ultimately inspire Iran to pursue nuclear weapons. But it’s also something that could have immediate effects back at home in America. That’s because Iran is an oil powerhouse, and sanctions on its oil exports could cause the price of oil to surge across the globe — something Americans would feel at the gas pump.

Experts say that if Trump withdraws from the deal, it’s likely the price of gas could increase by upward of 30 cents per gallon. “Gas prices nationally would rise to over $3 a gallon if Trump places wide-ranging sanctions on Iran,” Patrick DeHaan, a senior petroleum analyst at GasBuddy, a firm that monitors gasoline pricing, told me.

Analysts say prices could get higher still if Trump’s withdrawal from the Iran deal is followed by further escalation of tensions between the US and Iran. If Trump begins talk of using “fire and fury” to take out Iran’s nuclear weapon, the price of oil could jump enormously: Fears of widespread turbulence and war in the Middle East would cause a scramble for oil supplies and push up the price. Some experts say gas prices could spike past $4 a gallon in some states if war looks imminent.

At the moment, oil watchers are predicting some fireworks. “The Iranian nuclear deal is dead in the water and a Trump torpedo is fast approaching,” Stephen Brennock, an oil analyst at the brokerage firm PVM Oil Associates, wrote to clients in April.

If Trump took military action against Iran, it would likely spark protests on the left and among his antiwar supporters. A spike in the price of gas would probably help fuel them.

Oil prices are rising as Trump talks about killing the Iran deal

Analysts say that widespread anticipation of Trump withdrawing from the Iran deal is part of what’s driven a rise in global oil prices in recent weeks. Fear that oil supplies could shrink in the future makes prices higher today.

Brent crude, the international benchmark for oil prices, increased 3.5 percent in April to $71.04 a barrel, hitting its highest rate since late 2014.

As a result, the price of gas has shot up too. The national average price of gas is up to $2.81 a gallon, the highest it’s been since 2014.

“I would have to say several dollars per barrel of what we’re seeing today is due to Iran concerns,” DeHaan said.

Trump’s Iran sanctions could do damage. His rhetoric could do even more.

If Trump does pull the US out of the nuclear pact and reimpose sanctions, the energy firm FGE estimates that Iran could decrease its oil exports by up to 1 million barrels of oil a day. The plunge in oil supplies will drive up the price of oil, and gas, significantly.

Antoine Halff, a scholar at Columbia University’s Center on Global Energy Policy and former analyst at the International Energy Agency, says that a key question will be how the Organization of the Petroleum Exporting Countries (OPEC) reacts to a plunge in oil supplies after Trump kills the Iran deal. If sanctions on Iran’s oil sales cause prices to increase significantly, OPEC could decide that it should export more oil in order to make sure prices don’t rise too high and kill off demand.

There’s another potential off-ramp. If US-Iranian relations remain relatively stable after a Trump move to kill the pact — admittedly a huge “if” — oil prices could stabilize and potentially fall back to recent levels.

But if things grow worse and Trump and Iran start talking openly about war, the price of oil could skyrocket as investors brace for continued instability — or far, far worse — in the region that produces much of the world’s oil.

That could send prices spiraling up past $3 a gallon at the gas pump, which could really begin to hurt American consumers. That, in turn, would be a tangible reminder that US military intervention abroad can exact a steep price at home.

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