Is Trump “overconfident” or merely “putting on a show” regarding Iran and oil prices?
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There is a warning on Wall Street: "Past performance does not predict future outcomes." This principle is equally instructive for the White House. Bloomberg columnist Javier Blas points out that the Trump administration seems to believe that since last year’s airstrikes on Iran’s nuclear facilities did not lead to a sharp rise in oil prices, similar future actions will also not cause major volatility in the energy market.
US Energy Secretary Chris Wright said in an interview on Wednesday that after last June's oil price briefly rose and then quickly fell, it demonstrated the effectiveness of the "Trump energy-dominant agenda." This comment reflects a core position of the White House: Oil supply should not become an obstacle to US military action. According to CCTV Finance, insiders revealed that the US military is prepared for "possibly launching strikes against Iran as early as this weekend," but President Trump has not yet made a final decision.
However, this optimistic prediction based on historical experience may underestimate the intensity of current geopolitical risks. In recent months, Iran has continuously signaled through military exercises that oil will be its key leverage in retaliating against any attack. The country produces nearly 5 million barrels of crude oil and other petroleum per day, accounting for close to 5% of global supply.
If the US misjudges Iran’s tolerance for risk and mistakenly assumes it will not retaliate fiercely, then oil facilities in the Middle East could become real attack targets. Using past conflicts to predict future outcomes may cause decision-makers to overlook more dangerous but as-yet-unrealized possibilities.
Source of the White House's Confidence
Secretary Wright's optimistic judgment on oil price risks is mainly based on the historical experience of the "12-day war" in June 2025, when the US military bombed Iran’s nuclear facilities and oil prices only displayed brief fluctuations.
Wright attributes this outcome to two major factors: Record US shale oil production, and the White House’s rebuilt diplomatic ties with Gulf oil-producing countries like Saudi Arabia and the UAE. Compared to the era from Nixon to George W. Bush, the current US energy landscape offers broader strategic buffer.
Recent data seem to support this view: the 2020 Soleimani incident, the 2024 missile exchanges between Israel and Iran, and the 2025 bombing of nuclear facilities—all these geopolitical crises had little real impact on oil prices. For some traders, shorting crude oil during missile exchanges has even become a profitable strategy.
Why “War Premium” Has Shrunk
The so-called “war premium”—risk markups in energy markets during Middle East conflicts—has continued to shrink, and this is due to multiple structural factors combined.
First, the supply base has strengthened. US oil production is at a historic high and still rising, providing a strategic buffer to the global market. Second, policy support is clear. Washington has shown a “whatever it takes” posture to curb supply interruptions, including tapping the Strategic Petroleum Reserve to stabilize expectations. Third, oil-producing countries have recovered faster than expected. When Saudi Arabia’s Abqaiq and Khurais oilfields were attacked in 2019, supply dropped about 50%, but the outage lasted only days—much shorter than the months expected—significantly correcting traders’ views on supply vulnerability.
Market mechanisms have evolved in sync. Liquidity in oil options markets has increased significantly, allowing traders to buy insurance at reasonable cost rather than raise prices drastically during sudden conflicts. The widespread use of commercial satellite imagery also enables near real-time monitoring of battle developments, greatly weakening the disruptive pricing effect of the “fog of war.”
With these factors combined, today’s market is far more resilient to the spillover effects of US-Iran conflict than in the past.
The White House May Be in False Security
As a senior oil executive, Wright’s deep insights into the oil market make him unlikely to truly confuse resilience with immunity. Therefore, his recent comments may be interpreted as part of the psychological warfare between the US and Iran, aiming to signal Tehran that the White House is unafraid of oil weapons—even if, privately, there is wariness.
However, if the information battle is miscommunicated and leads decision-makers themselves to be convinced by the optimistic narrative, the consequences could be even more problematic. By constantly validating their own assumptions with historical conflicts, US officials may slide into a blind spot created by key alternative scenarios.
Risk Disclosure and DisclaimerThe market carries risk, and investment needs caution. This article does not constitute individual investment advice and has not taken into account individual users’ special investment objectives, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article fit their specific circumstances. Any investment based on this article is at your own risk. ```