Does Trump Want Lower Gas Prices or Oil Sanctions on Iran?
The law of supply and demand is the most basic insight in economics. When there’s more of a good available for sale than people who want to buy it, the price goes down, and when more people want to buy the good than is available, the price goes up. As progressives have learned the hard way with housing, there is no magical government intervention to get around this.
That law presents a bit of a problem for President Donald Trump’s agenda on oil. On one hand, Trump ran on criticisms of Biden-era inflation, including high gas prices. He also wants to drive down oil prices to pressure Russia. On the other hand, Trump wants to cut off Iranian oil exports in order to “bankrupt” the country and build leverage in negotiations.
In other words, he’s trying to both increase and reduce the oil supply at the same time.
Last week, the Trump administration claimed that it found a way to square the circle. The government of Iraq suddenly announced last Monday that it would resume exporting Kurdish oil after resolving a years-long revenue-sharing dispute with the autonomous region of Kurdistan. Several Iraqi and U.S. officials told Reuters on Friday that the announcement was actually part of the pressure campaign against Iran.
The Trump administration had threatened to add Iraq as a sanctions target unless it increased oil exports to offset the expected drop in Iranian exports, the officials claimed. “It’s not only important for regional security that our Kurdish partners be allowed to export their own oil but also help keep the price of gas low,” a White House official told Reuters.
But the math doesn’t add up. The Trump administration is expecting to cut Iranian oil exports by 90 percent, from 1.5 million barrels per day to 100,000 barrels per day, U.S. Treasury Secretary Scott Bessent says. Iraqi Kurdish oil exports are expected to be only 185,000 barrels per day, according to Iraq’s oil ministry. Even by the official numbers, that’s a 1.2 million barrel per day supply cut.
The real gap may be larger. Iran is now exporting 1.74 million barrels a day to China alone, Bloomberg reported last week, citing data from the market intelligence firm Kpler. And although Kurdish oil exports were officially shut down, some of the oil was alre
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