Rising tensions in the Middle East are spilling into domestic energy policy debates as lawmakers weigh how global conflict is hitting Americans at the pump. With oil markets reacting to instability around the Strait of Hormuz, concerns over supply disruptions are now colliding with questions about whether U.S. energy policy serves domestic consumers first.

Rep. Ro Khanna, D-Calif., joined FOX Business’ Maria Bartiromo on “Mornings with Maria” to argue that the current crisis underscores what he sees as a fundamental policy flaw: continuing to export U.S. oil while prices rise at home.

When Bartiromo pointed to his legislation aimed at stopping U.S. oil exports during the Iran conflict and pressed him on why he supported that move, Khanna framed the issue as prioritizing domestic supply.

“Maria, it’s common sense. Why would we be sending our oil overseas when Americans are getting fleeced at the pump… We should have our oil supply for Americans… That would bring down the price,” Khanna said.

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The debate comes as oil flows through one of the world’s most critical shipping lanes face disruptions, amplifying price volatility and renewing scrutiny over U.S. export policy first loosened nearly a decade ago. Critics argue exports strengthen global energy influence, while others say they disconnect domestic production from consumer relief.

Bartiromo pushed back, noting that the U.S. has been producing oil at high levels and questioning whether restricting exports would address the broader energy picture.

“This was a giveaway in 2015 to the big oil companies… It was good for them… Not good for the average consumer,” Khanna added.

OIL PRICES PLUNGE AFTER IRAN SAYS STRAIT OF HORMUZ OPEN FOR COMMERCIAL SHIPPING TRAFFIC

The exchange reflects a broader divide over energy policy as global supply disruptions put pressure on prices while policymakers debate whether exports strengthen U.S. influence abroad or limit relief at home.

Bartiromo also pressed Khanna on the broader strategy toward Iran, questioning how diplomacy would prevent the country from developing a nuclear weapon and whether Tehran could be trusted. 

“The American people are tired of it. They want people who are going to be team America. They want to bring gas prices down here and care about our nation and get us out of these wars,” he said.

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Oil prices have surged sharply in recent days, with some analysts warning that Brent crude could climb to $150 per barrel if the Strait of Hormuz remains closed for a prolonged period amid the escalating Iran–Israel conflict. After a sharp selloff last week, Indian equities may face further valuation pressure in the near term due to heightened volatility, analysts said.

Crude oil prices crossed the key psychological mark of $100 per barrel last week, the first time since Russia’s invasion of Ukraine in 2022. Despite attempts by the US administration to reassure markets, the conflict in the oil-rich Middle East continues to intensify.

Iran has warned that oil prices could surge to as high as $200 per barrel if the conflict escalates further. Mojtaba Khamenei, Iran’s new supreme leader and son of Ayatollah Ali Khamenei, described the Strait of Hormuz as a strategic “tool of pressure” that must remain shut during the conflict. In a message aired on state television, he also warned that US military bases across the region could face attacks as Iran seeks retaliation for casualties from the conflict.

Oil prices have risen amid growing expectations that the Strait of Hormuz may remain shut, disrupting global energy trade. The narrow 33-km waterway connecting the Persian Gulf and the Gulf of Oman carries more than 20% of the world’s oil and gas shipments, making it one of the most critical chokepoints in global energy markets.

What lies ahead for oil prices

Global crude oil prices could rise to $120 per barrel in the near term and potentially reach $150 per barrel if the war continues for over a month and geopolitical tensions remain elevated in West Asia, said Kayanat Chainwala, Assistant Vice President at Kotak Securities.

“Any prolonged disruption to this trade route will be bullish for crude oil and negative for other commodities, as it fuels inflation concerns and could delay interest rate cuts,” Chainwala said.
A report by Nuvama also noted that crude prices could climb to $150 per barrel if the Strait of Hormuz remains closed for four to eight weeks. However, such extreme price levels could eventually lead to demand destruction and trigger alternative supply responses.The report added that Asian economies are likely to bear the brunt of the disruption, as nearly 13 million barrels per day (mbpd) of oil shipments to countries including China, India, Japan and South Korea pass through the Strait of Hormuz.

Meanwhile, Systematix Institutional Equities said global crude markets have entered a phase of heightened volatility over the past two weeks, driven by the destruction of oil and gas assets in West Asia, which has added a strong geopolitical risk premium to prices.

“Tanker freight rates and insurance premiums for vessels passing through high-risk zones have also surged, significantly raising procurement costs,” the brokerage said.

How Indian stock markets may react

The Nifty 50 fell 5.3% last week as the Iran–Israel conflict, a weakening rupee, persistent FII outflows and concerns over fuel supply weighed on sentiment. While Systematix expects near-term volatility to impact valuations, it continues to prefer Reliance Industries, Petronet LNG, Deep Industries and Gulf Oil as long-term bets.

According to Vinod Nair, Head of Research at Geojit Investments, market direction in the coming weeks will largely depend on developments in the Iran conflict and the trajectory of crude prices, given their implications for inflation, corporate margins, the current account deficit and RBI policy flexibility.

“A firm dollar and higher US bond yields may keep FIIs selective and volatility elevated. Selective value opportunities may emerge in fundamentally resilient and domestically driven sectors, while energy-sensitive segments could remain under pressure if crude prices stay elevated,” he said.

He added that domestic institutional buying has provided some cushion, but a sustained market recovery would likely require clear signs of geopolitical de-escalation, stabilisation in crude prices and improved clarity on fuel supply dynamics.

Siddhartha Khemka, Head of Research – Wealth Management at Motilal Oswal Financial Services, said market volatility is likely to persist as geopolitical tensions disrupt the energy market and keep risk sentiment fragile.

“Indian equities have seen a sharp correction in 2026 amid heightened global uncertainty, resulting in significant erosion of market value across segments,” Khemka said.

The Nifty 50 has declined over 11% so far this year, while the Nifty Midcap and Smallcap indices are down around 10% each. In March alone, the Nifty has fallen about 8%, marking its steepest monthly decline since the pandemic-driven crash of March 2020.

On the currency front, the Indian rupee recently hit a record low of Rs 92.45 against the US dollar as rising energy prices and risk-off sentiment heightened concerns about India’s current account deficit, given the country imports nearly 88% of its crude oil requirements.

Elevated oil prices have also intensified concerns around inflationary pressures, widening external balances and pressure on corporate margins, prompting investors to trim equity exposure and shift towards safer assets.

“Rate-sensitive and cyclical sectors such as banking, financial services and automobiles have seen notable selling pressure,” Khemka added.

Looking ahead, markets are expected to remain highly sensitive to developments in the West Asia conflict, movements in crude oil prices and trends in foreign fund flows.

“Persistent foreign outflows and elevated oil prices could keep sentiment cautious, while any signs of easing geopolitical tensions may provide relief to markets,” he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

President Donald Trump pushed back Monday on his own energy secretary’s claim that a return to $3-a-gallon gas will not come through the end of the year.

“No, I think he’s wrong on that, totally wrong,” Trump told The Hill on Monday, when asked about Energy Secretary’s Christopher Wright’s interview with CNN’s “State of the Union” on Sunday.

Trump remains steadfast in his conviction that gas prices in America are going to drop precipitously “as soon as this ends,” referring to the oil blockade in the Strait of Hormuz, echoing oft-repeated vows for those concerned that oil prices in America might actually return all the way up to Biden administration levels.

“The blockade is very powerful, very strong,” Trump added to The Hill, pointing at Iran’s obstruction effort. “They lose $500 million a day with the blockade up. We control it. They don’t control it.”

BESSENT WARNS GAS STATIONS THAT TREASURY DEPT WILL KEEP THEM ‘HONEST’ AFTER SPIKE IN PRICES

Wright’s comments were not all that unaligned with Trump’s position, but Wright was a bit less convicted on prices on when gas might drop below $3 again.

“I don’t know, that could happen later this year, that might not happen until next year, but prices have likely peaked and they will start going down,” Wright told CNN’s Jake Tapper, who asked further that gas “might not be under $3 a gallon until 2027?”

“Certainly, with a resolution of this conflict, you will see prices go down,” Wright added. “Prices across the board on energy prices will go down.”

OIL PRODUCERS ORG SHREDS CALIFORNIA DEM FOR BLAMING IRAN WAR FOR HIS DISTRICT’S GAS PRICES

“Under $3 a gallon is pretty tremendous — in inflation-adjusted terms,” Wright added to Tapper. “We had that in the Trump administration, but we hadn’t seen that in inflation-adjusted terms for quite a long time. We will get back there, for sure.”

Fuel prices in America on Monday are at an average of $4.04, according to AAA.

The highest average prices come in the coastal states, the only places where gas is over $4, while the midwest states have the lowest averages in the low-to-mid 3s.

Ticker	Security	Last	Change	Change %
CHEV	CHARGING ROBOTICS INC	3.3	+0.80	+32.00%
SUN	SUNOCO	63.05	-1.49	-2.31%
XOM	EXXON MOBIL CORP.	146.44	-5.54	-3.65%
CVX	CHEVRON CORP.	183.99	-4.16	-2.21%
SHEL	SHELL PLC	87.81	-3.69	-4.03%
DINO	HF SINCLAIR	57.15	-2.96	-4.92%

BESSENT RULES OUT GOVERNMENT INTERVENTION IN OIL FUTURES MARKET DURING IRAN WAR

Trump had long warned that the rise in American gas prices at the pump was a transitory inflation issue on the expectation that global oil supply was strained due to Iran’s retaliatory choking off of oil flowing through the Strait of Hormuz.

Trump and Treasury Secretary Scott Bessent have also noted for weeks that the U.S. is a net exporter of oil, has plenty of supply, with only a fraction of oil from the Middle East. So when local gas stations raised prices under the fear of future supply shortages elsewhere around the globe — potential “bad actors,” according to Bessent — they were not only guessing, but expecting something that would never come, they argued.

“We’ll be looking at Treasury to try to keep the retail gas stations honest — that you did this on the way up, better be doing this on the way down,” Bessent told the CNBC Invest in America Forum last week. “And I am sure the president will call out anyone who’s a bad actor.”

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What went up, must now come down, Bessent told the CNBC forum host Wednesday when asked if the above was a warning.

“I’m sure that,” Bessent said with a calculated pause, “everyone will be a good actor.”