Oil Hits $119 as Trump’s Energy Promise Comes True – State Street Energy Select Sector SPDR ETF (ARCA:XLE)

Cheap energy should be the easy win for the Trump administration. Instead, oil markets are moving in the opposite direction. Crude oil briefly rose to around $119 a barrel, the highest level since 2022, as escalating tensions between the US, Israel and Iran roiled global energy markets.

The spike is a reminder of how quickly geopolitical shocks can overwhelm even the most aggressive domestic energy strategy.

Tensions in the Middle East are roiling the oil markets

Energy traders reacted quickly as the spreading conflict raised fears of supply disruptions in the Persian Gulf.

The biggest problem centers on the Strait of Hormuz, the narrow shipping lane that carries about 20% of the world’s oil supplies. Any threat to tanker traffic through the corridor could cause crude oil prices to rise sharply.

These fears pushed oil to a multi-year high before prices fell slightly as markets assessed how governments might respond.

The increase is already fueling broader concerns about inflation as energy costs feed into gasoline prices, transportation and manufacturing.

Strategic reserve release back on the table

Governments are now exploring emergency measures to stabilize markets.

The G7 countries are reportedly discussing a coordinated release of 300 million to 400 million barrels from strategic oil reserves. The group collectively owns approximately 1.2 billion barrels of emergency stockpile.

Such releases have traditionally been used to calm oil markets during geopolitical shocks.

But the math is brutal. Global oil demand is around 100 million barrels per day, meaning even a large release of reserves could provide only temporary relief.

Energy promises meet market reality

Lower energy costs were a central economic message from the president Donald Trumpwho argued that expanding U.S. energy production would lower prices.

Instead, the conflict with Iran shows the opposite dynamic: in global oil markets, geopolitics can move prices much faster than policy.