United States is being too complacent about Iran and oil prices

“Past performance is no guarantee of future results,” is a disclaimer deeply ingrained in the Wall Street psyche. And for good reason. The White House should heed it, too. Just because President Donald Trump bombed Iran last year without sending oil prices skyrocketing, it doesn’t mean he can do it again.

It’s easy to see why the Trump administration feels secure. Thanks to the shale revolution, American oil production is at a record high — an embarrassment of riches compared with the energy landscape that predecessors from Richard Nixon to George W. Bush had to navigate. In historical terms, oil is cheap, and chants of “death to America” in the Middle East no longer push energy traders into a buying frenzy.

On Wednesday, I asked US Secretary of Energy Chris Wright about the risk of a price spike if war breaks out again with Iran. If his answer truly reflects the White House view, it may feel more inclined to renew the conflict because it doesn’t see oil as constraining its military choices.


"If you look back at the 12-Day War last year, that’s a pretty serious conflict with a major oil producer,” Wright told me in an interview, referring to the Israeli-Iranian war in June 2025 that ended after the US bombed nuclear facilities in Iran. “Oil prices blipped up and then went back down,” he said.

That is “perfect evidence of Trump’s energy dominance agenda, you know, growing production in the United States,” he continued. It helped, Wright added, that the White House has reestablished relations with key oil- and gas-producing nations in the Middle East such as Saudi Arabia, the United Arab Emirates, Qatar and Kuwait.

Is the top American energy official right? For the last few years, the energy market has weathered multiple Middle East crises. In 2020 the US military killed Qasem Soleimani, a top Iranian military leader. In 2024 Tehran fired missiles at Tel Aviv. Last June, Trump bombed Tehran’s nuclear installations. On each occasion, oil prices barely moved.

With hindsight, every oil-price rally was an opportunity to bet on it falling back again. It required nerves of steel, but short selling crude while the bombs and missiles were flying was a winning trade. And that’s what many oil traders did.

But I worry Washington is lulling itself into a false sense of security. The risk is that US officials might misread Tehran’s risk tolerance to respond far more forcefully to any American attack than it did in the past. If the Islamic Republic feels its survival is at stake, the regional energy industry could become a target. By interpreting past confrontations in ways that reinforce their own current assumptions, US officials risk missing important alternative scenarios.

One of those other possible outcomes is crystal clear: For weeks, Iranian officials have been telegraphing, including via military drills, that oil would be a central part of their response to any attack. Back in 2025, Tehran limited its response to a symbolic missile salvo against two American military bases in Qatar and Iraq. Another alternative scenario is that a US attack triggers the collapse of the regime. The vacuum that would likely follow could include oil-worker walkouts like those that preceded the 1979 Islamic revolution. Today, Iran pumps near 5 million barrels a day of crude and other oil liquids, nearly 5% of global output.

So why are US officials taking a more complacent view?

For several years the so-called “war premium” — reflecting the risk to the energy markets of Middle East conflicts — has been shrinking. That’s for several reasons. First, US oil production is at a record high, and still rising. Second, Washington has demonstrated it would adopt a “whatever it takes” attitude to minimize supply disruptions, including tapping its Strategic Petroleum Reserve. Third, nations like Saudi Arabia have demonstrated a remarkable ability to recover from a supply crisis. The 2019 attacks against Saudi oil facilities in Abqaiq and Khurais, which cut the kingdom’s supply by about 50%, lasted only a few days rather than the months feared.

Other factors also figure in US strategic thinking. The oil-options market is far more liquid these days, letting traders buy insurance at reasonable cost instead of making hasty bets when conflict breaks out that inflate prices. It helps, too, that the fog of war is made clearer by the availability of commercial satellite photographs that allow traders to observe in near real-time what’s happening.

Put it all together, and the market is today better prepared than ever to handle the spillover of a US-Iran war. But don’t confuse resilience with immunity. Wright, a former shale executive, knows the oil market too well to make that mistake. Thus, perhaps, his message is part of the psychological war between Washington and Tehran. Nothing better for the White House than to try to convince the ayatollahs that it doesn’t fear the oil weapon. Even if, surely, it does.

(This is an opinion piece by Bloomberg)