President Trump is in gut-check time. There is still no clear endgame in Iran. The lack of a game plan is making people sweat, that means everyone from Wall Street and the man on the street.
Everyone needs to brace for higher gas prices, costlier goods and a fresh inflation threat.
President Donald Trump is also not helping matters, and the oil market is feeling the jolt. With all that in mind, it could soon hit Americans where it hurts the most: at the gas station.
In his latest speech on Iran, Trump did not want to calm fears and he did the opposite. He said the war would go on for weeks and promised to hit Iran “extremely hard.” That told traders that this fight might not end anytime soon.
That matters because when war threatens global oil supply, oil prices usually go into hyperbolic mode. And when oil prices jump, everyday people tend to feel the pinch. Higher gasoline costs, more expensive deliveries, and rising prices are already starting to make their impact felt.
This is why Wall Street reacted with such fury. Investors heard Trump’s speech and saw the risk, reacting as if we were already in a deep energy shock.
But this isn’t just a story for traders in New York. It’s also a story for families who want to know why it costs more to fill up the car, send a package, or buy basic things.
Trump’s Iran speech rattles oil traders and raises fresh fears
Before Trump spoke, a lot of traders were hoping for some sign of a plan, like a way to calm the market, slow the conflict, or protect supply routes.
Unfortunately, we did not get any of that.
Trump is making us think that the fight might go on for a while. That is raising the alarm bells. Why is that? Well, the principal point is the Strait of Hormuz. It’s one of the narrowest shipping lanes in the world, but it’s now in prime focus because it’s responsible for moving a huge share of the world’s oil.
If oil cannot move freely through that route, the world will feel the damage.
That is exactly why crude prices started to skyrocket after the speech. U.S. oil rose above $110 per barrel. At the same time, Brent crude rose above $107. In plain English, traders started betting that oil could get harder to find and more expensive to buy.
That becomes a major problem with Wall Street. However, increasingly, it’s also a massive issue for Main Street.
When the market anticipates tighter supply, analysts begin to scrutinize the next pressure and pain points. What all of this translates into is higher gas prices, more expensive diesel, and a bigger hit to household budgets. The longer this war goes on, the more dangerous that threat gets.
One analyst, John Kilduff, founding partner at Again Capital, put it bluntly, calling the speech “a disaster.” The reaction shows the nervousness that is being embedded.
Related: Chevron, Shell make stunning Venezuela move as Iran crisis deepens
And this where the story will get a personal touch.
Most Americans don’t pay attention to the daily changes in crude oil prices. But they do notice when it costs more to fill up at the local gas station, or book a flight, or buy groceries that got pricier because shipping costs rose.
That’s how a speech in Washington can quickly turn into a money issue on Main Street.
Higher gas and diesel prices could slam everyday Americans next
For regular people, the real question remains, will the outcome make life more expensive?
It very well could.
The United States produces a lot of its own oil, which gives it a level of protection. However, America is still part of the global energy market, and when a supply line gets clogged, then prices can rise everywhere.
For now, diesel is the biggest red flag.
Not many people contemplate diesel, but it is important for the economy. It moves trucks, ships goods, and keeps the flow of goods going. When diesel prices go up, the cost of moving almost everything can go up too.
That could mean higher prices for food, shipping, and other things that are already putting a strain on household budgets.
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Photo by Anadolu on Getty Images
Why Trump’s Iran speech matters to your wallet
- Trump believes the Iran war can potentially keep going for weeks.
- There is no clear plan to wind up the war and ease the pressure on oil markets.
- Oil prices are starting to increase rapidly thanks to a tighter supply situation.
- Gasoline and diesel prices are next on the list.
- If the conflict goes on for a long time, it could cause prices to rise for ordinary Americans.
This is why the market reaction is crucial.
Wall Street continues to monitor the situation under the assumption that the energy prices stay high. The man on the street is looking at something that is more direct.
A more expensive commute, higher delivery costs, and one more thing that makes it hard for the family to make ends meet.
That is what makes Trump’s speech so impactful and pertinent.
This was not merely another update on the war situation. The speech and subsequent developments in Washington are being interpreted as a warning. Anyone who drives to work, goes grocery shopping, or is worried about the rising cost of living should be aware.
Because if oil keeps climbing, the story will not just limit itself to trading screens.
Instead, we will see the events unfold on gas station signs across America.
Related: Chevron CEO sounds alarm as Trump puts a 10-day clock on Iran
