U.S. energy policy mitigating the price impacts of Iran conflict

By EPN Staff

While oil prices are on the rise due to the war against Iran, U.S. Energy Secretary Chris Wright says relief is coming. 

Wright said federal energy policy decisions help to mitigate soaring costs in the coming weeks, which include discussions with other countries about securing the Strait of Hormuz, a critical passage for about one-fifth of the world's oil from the Persian Gulf to the open ocean.

Wright also invoked the Defense Protection Act to reinstate oil production off the coast of Southern California, which has been idle since 2015. 

Why It Matters

After the United States and Israel commenced strikes against Iran on Feb. 28, the regime in Tehran responded by effectively closing the Strait of Hormuz through attacks on international oil tankers and other commercial shipping. The closure is causing significant disruptions in global oil markets. 

Domestic gasoline prices are directly influenced by the world price of oil, and in recent days, prices at gas pumps across America have indeed increased. Those increases have given rise to fears that U.S. consumers may be in store for oil shocks similar to those experienced in 1973 and 1979. That’s when oil prices rose dramatically as a result of events in the Middle East, leading to fuel rationing and long gas lines. However, many energy observers say that circumstances are considerably different now than they were in the 1970’s

The U.S. is no longer reliant on oil imported from the Middle East, due in part to greater fuel efficiency, but also to the adoption of policies that prioritize domestic exploration and production. In the last two decades, U.S. oil production has increased from an average of 5 million barrels per day in 2010 to more than 13.5 million in 2025. 

At the same time, the U.S. has become a net exporter of crude oil and petroleum products. In 2015, then-House Speaker Paul Ryan worked out a deal to pass a bill in Congress to lift the petroleum export ban set in 1975. Since that time, U.S. oil exports have climbed to well over 100 million barrels per month, including roughly 1.8 million barrels per day to Europe, and 1.5 million per day to Asia. 

While prices have increased since the start of the war, the combination of these policies has mitigated the price shock stemming from the disruption of supply.  For perspective, in the 1973 oil crisis, global crude prices increased roughly 300%; today, the price has gone up roughly 50% since the start of the war. 

Correspondingly, while the average price of gasoline in the U.S. is up about 20% from before the onset of hostilities, from $2.93 per gallon on Feb 23 to $3.50 per gallon, it remains considerably lower than from where it was at its height in 2022 of nearly $5.00 per gallon, owing to a combination of factors, including higher domestic oil production reducing the influence of middle eastern supplies on the overall market. 

The bigger picture

More recent policy moves by the administration are being undertaken with the intention of tempering the effects of the Hormuz closure. On March 11, the International Energy Agency announced that all of the organization’s 32 members agreed to collectively release a record 400 million barrels of oil from strategic reserves. In a statement announcing the release, Wright, who helped negotiate the agreement on behalf of the Trump administration, said that the U.S. would supply 172 million barrels from the Strategic Petroleum Reserve. 

The Energy Department is structuring the release as an exchange, rather than a direct sale, with the goal of rapidly replenishing SPR’s stocks. In a press release announcing the exchange, the Department said that “under the terms of the exchange, companies will return the borrowed oil to DOE with additional barrels as a premium, strengthening the Strategic Petroleum Reserve while stabilizing markets at no cost to American taxpayers.”