WTI crude posted its biggest gain in nearly six years; Trump said he’s not concerned, but senior officials say the U.S. government is studying all options to curb prices.

The escalation of the Middle East conflict has triggered supply shocks that have terrified the market. U.S. benchmark crude oil futures surged sharply this Thursday, marking the largest single-day closing gain in nearly six years. Faced with the threat of rapidly rising oil prices to inflation and the economy, the Trump administration is urgently evaluating all possible price suppression tools.

During Thursday's U.S. stock market midday session on March 5, April WTI crude oil futures briefly rose above $82, up about 10% intraday, closing up 8.5% - the largest gain since 2020 - at $81.01 per barrel. The international oil benchmark, Brent crude's May contract, closed up 4.93% at $85.41 per barrel. Both prices set new closing highs since July 2024.

The average U.S. retail gasoline price jumped about 27 cents from last week to $3.25 per gallon. Facing political pressure from surging gasoline prices, President Trump said on Thursday that he was not worried about domestic oil prices rising due to escalating conflict with Iran, stating that "actions to further reduce oil price pressure are coming soon."

In a media interview, Trump stated that U.S. military actions are his top priority. When asked about rising oil prices, he said: "I'm not worried at all. Once the action ends, oil prices will drop quickly; if prices rise, so be it. But this military operation is far more important than a slight increase in oil prices."

U.S. Secretary of the Interior Burgum subsequently confirmed that the Trump administration is weighing a series of response plans, saying "all options are on the table," including immediate measures and more complex long-term plans. After this news, crude oil futures gave back some gains in after-hours trading.

Trump Administration Urgently Evaluates Price Suppression Options

According to reports, Secretary Burgum stated in an interview Thursday that Trump convened Burgum and other senior advisers on Tuesday to discuss a range of response options, and subsequently announced plans to provide insurance for tankers passing through the Strait of Hormuz and, when necessary, U.S. Navy escort.

Currently, the Trump administration is considering options including: tapping the Strategic Petroleum Reserve (SPR), possibly coordinating with other countries to maximize effectiveness; exempting fuel blending requirements; and direct participation of the U.S. Treasury in crude oil futures trading—an unprecedented move if enacted.

However, Burgum said that the government has not actually used the SPR so far. The details of the tanker insurance plan are still being worked out. Treasury Secretary Besant and Energy Secretary Wright are already involved.

Burgum said: "As the federal government, we have the opportunity to intervene and re-establish some kind of normal order. The United States can take on certain risks to help ensure our allies’ sufficient supplies, and only we can do this because we have enough financial strength and naval power."

White House Press Secretary Levitt said Wednesday that the U.S. government currently has no timetable for when the Strait of Hormuz will be safe for commercial shipping again. She said: "I don’t want to commit to a time point, but this is indeed something the Department of War and the Department of Energy are actively calculating."

Iran Conflict Escalates; Strait of Hormuz Effectively Closed

The direct trigger for the oil price surge is the ongoing escalation of the U.S.-Iran conflict. Since last Saturday’s U.S. and Israeli military strikes on Iran, U.S. oil has accumulated almost a 21% gain over four days based on closing price.

According to CCTV News, late at night on Monday March 2, an adviser to the commander of Iran’s Islamic Revolutionary Guard Corps stated that the Strait of Hormuz had been closed, and Iran would strike all ships attempting to pass through it. Afterwards, Deputy Commander of the IRGC Navy, Mohammad Akbarzadeh, stated that the Strait of Hormuz was completely under the control of the Iranian Navy, with more than ten tankers hit by artillery in the strait.

Also according to CCTV, on Thursday morning, the IRGC stated that at dawn, a U.S. tanker in the northern Persian Gulf was hit by a missile launched by its navy.

The British Royal Navy reported Thursday that a large explosion occurred near a moored tanker in Iraqi territorial waters, with a small vessel departing rapidly from the scene. Middle East Arab countries and Israel continue to intercept Iranian missiles and drones, Qatar has asked residents to stay indoors, and Kuwait has reduced the processing load at three refineries.

Media vessel tracking data show transit volume through the Strait of Hormuz has plummeted by more than 95%; major tankers and gas vessels are all avoiding the area, and the few ships still sailing have turned off their location responders.

According to International Energy Agency (IEA) data, about 15 million barrels of crude oil and 5 million barrels of refined products pass through the Strait of Hormuz daily in 2025. The IEA states that the volume of oil exported via the strait is huge, with limited alternative routes, meaning any disruption to the flow will have significant impacts.

According to CCTV, on Thursday morning local time, Amir Heydari, Deputy Commander of Iran’s Khatam al-Anbia Central Command, said in an interview that Iran had not blocked the Strait of Hormuz.

The media pointed out that although Iranian military officials say they do not intend to close the strait to shipping, in reality almost no ship owners are willing to transit it; some upstream producers have been forced to begin production cuts.

Wall Street: Stagflation Risk Rises, Fed Caught in Dilemma

The surging oil prices have sparked dual concerns over inflation and economic slowdown. On Thursday, the three major U.S. indices closed lower, failing to retain Wednesday’s rebound momentum. The Dow fell over 1%, leading the drop; small-cap index Russell 2000 fell nearly 2%. Airline, banking, industrial, and logistics sectors were among the biggest losers. The U.S. Global Airlines ETF fell about 4.5% in a single day. The surge in oil led the energy sector up nearly 0.6%, one of only two S&P 500 sectors closing higher.

Kevin Khang, Senior Global Economist at Vanguard Group, said: "From a market psychology perspective, the longer the conflict drags on, the dimmer the prospects for a sustainable resolution, and the probability of a substantial economic shock keeps rising."

Ed Yardeni, President of Yardeni Research, wrote in his client report: "So far, the only hedges against war risk have been energy stocks and commodities." He warned that a prolonged closure of the Strait of Hormuz would "increase the risk of economic stagflation" and put the Federal Reserve in a bind, because even if the economy weakens, high inflation would prevent the Fed from cutting rates.

Derivatives market expectations for rate cuts have adjusted rapidly. Earlier this week, traders expected two Fed rate cuts this year, but as oil and gasoline prices jumped, that expectation narrowed sharply. By Thursday, the probability of two rate cuts this year was estimated under 50%.

Commodity analysis institution Ritterbusch and Associates pointed out in a research note: "There is no definite conclusion about the end of the conflict; further oil price strength seems inevitable. If the conflict continues into next week, WTI rising to the $95 area is entirely possible."

Priyanka Sachdeva, Senior Market Analyst at Phillip Nova, stated: "Even a single successful attack on a tanker or infrastructure, or a sustained disruption, could cause oil prices to jump again."

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