Despite Trump's optimistic expectation that oil prices would significantly drop, the escalation of threats and statements about a long-term blockade have intensified market concerns.

Written by: Li Jia

Source: Wall Street Journal

The conflict in the Middle East continues to escalate, combined with the UAE's announcement of its exit from OPEC, which has caused U.S. gasoline prices to reach the highest level in four years, putting multiple pressures on the energy market.

On April 28, GasBuddy analyst Patrick de Haan tweeted that the national average gasoline price reached $4.17 per gallon that day, the highest since 2022, exceeding the $4.16 record set earlier this month, and he expects prices to continue rising. The American Automobile Association (AAA) reports that the average price of regular gasoline is slightly above $4.17, up 6 cents from the previous day; diesel prices have risen to $5.46 per gallon.

Although Trump optimistically expected in mid-April that oil prices "would significantly decrease" and "would be much lower" before the midterm elections, he publicly escalated threats on April 26: Iranian oil wells would initiate a destructive process within three days, and once "exploded," Iran would never be able to restore its original production capacity. According to Xinhua News Agency, Trump has informed his aides to prepare for a long-term blockade of Iran.

The surge in oil prices directly impacts consumer spending and exacerbates market concerns about inflation prospects. However, with the situation in Iran still unclear and the Strait of Hormuz remaining tense, there is significant uncertainty about the market's ability to see substantial relief in the short term.

The Middle East conflict combined with the UAE's "withdrawal" intensifies upward pressure on oil prices

The immediate trigger for this round of oil price increases is the Middle East conflict, which has obstructed passage through the Strait of Hormuz. According to AAA data, on February 26—two days before the outbreak of the Middle East conflict—the national average gasoline price in the U.S. was about $2.98 per gallon. Since then, shipping through the strait has continuously been disrupted, impacting global oil supplies and driving oil prices to rise.

The Strait of Hormuz is a strategic passage between Iran and Oman, through which about one-fifth of the world's crude oil and liquefied natural gas is transported. The exporting ships of OPEC Gulf oil-producing countries are obstructed, while the Trump administration has maintained a maritime blockade against Iranian ports while continuing to pressure for the reopening of the strait.

The oil price trend is also influenced by another significant variable. On April 28, the UAE announced its exit from OPEC, further stirring the global energy market. UAE Energy Minister Suhail Mohamed al-Mazrouei stated that this decision was made after reviewing the country's energy strategy and was not communicated with any other countries in advance.

The UAE's exit weakens OPEC's control over global oil supplies and will exacerbate its rifts with Saudi Arabia. Against the backdrop of the situation in the Strait of Hormuz already hindering exports of OPEC Gulf member countries, this turn of events complicates the market's supply outlook further.