Oil price nears $100 psychological level, Trump faces Iran conflict dilemma

July 25th, as international oil prices once again approached the key psychological level of $100 per barrel, U.S. President Trump's policy options during the escalating Iran conflict are diminishing, leaving the energy market facing greater uncertainty.

Analysts stated that global oil and fuel emergency reserves have significantly decreased, and the risk of Red Sea shipping remains high. If the conflict further escalates, the U.S. may face two choices: expand military action or accept Iran's actual control of the Strait of Hormuz.

Prior to this, oil prices briefly exceeded $100 per barrel due to Houthi rebel attacks on Red Sea shipping in Yemen, then fell back. Energy analysts warned that if both the Bab el-Mandeb and Hormuz Straits are simultaneously affected, oil prices could rise back to around $124 per barrel in August.

Currently, the U.S. has limited policy tools at its disposal:

The U.S. Strategic Petroleum Reserve (SPR) has dropped to around 311 million barrels, the lowest level since 1983;

U.S. shale oil production and refining capacity are near record highs;

There is limited room to release more strategic reserves;

Measures such as suspending fuel taxes would require approval from Congress.

Analysts pointed out that $100 per barrel not only represents a price change but also carries significant market psychology impact, reinforcing investors' concerns about energy crises and inflation risks.

Meanwhile, Iran believes it has leverage in the Strait of Hormuz issue and is seeking greater control. Some analysts believe that Trump's core choice now is to either continue escalating military action or seek a solution through negotiation.

Market participants stated that against the backdrop of the upcoming U.S. midterm elections, high oil prices may further increase political pressure on the Trump administration, with the ultimate solution depending on whether the U.S. and Iran can reach a new agreement.