Oil just hit $119.50 a barrel. The Strait of Hormuz is closed. Gas prices are about to surge. And the President's response is not surprising. "I have a plan for everything."
Let's break down what's actually happening, what Trump's "plan" might be, and what history tells us about what comes next for your money.
What Just Happened
This weekend, U.S. and Israeli forces hit Iran's oil facilities for the first time since the war began in early March. Iran retaliated by effectively shutting down the Strait of Hormuz. The narrow waterway that carries 20% of the world's oil supply.
The result:
Brent crude surged 30% on Sunday, briefly topping $119/barrel — the first time oil crossed $100 since Russia invaded Ukraine in 2022
Dow futures sank 1,000 points
Gulf Arab nations are cutting production because they can't safely export through the Strait
G7 energy ministers are calling emergency meetings to discuss releasing strategic oil reserves
Analysts are calling it the biggest oil supply disruption in history.
What Is Trump's "Plan"?
In a phone interview Monday morning, Trump said: "I have a plan for everything, OK?" but refused to share details.
Here's what it could be:
1. Strategic Petroleum Reserve (SPR) Release
The U.S. did this in 2022 when oil hit $124/barrel during the Russia-Ukraine war. Biden released 180 million barrels over six months. It worked. Prices came down. But the SPR is now at historically low levels after that drawdown, so there's less room to maneuver.
2. Pressure Saudi Arabia to Boost Production
Trump has done this before. In his first term, he pressured OPEC to pump more. But right now, Saudi and Gulf states are cutting output because their export routes through the Strait of Hormuz are compromised. You can't pump more oil if you can't ship it.
3. Fast Military Resolution
End the Strait of Hormuz closure by force. Secure the waterway so oil flows again. This is the most direct solution, but also the most dangerous and unpredictable.
4. Domestic Production Push
"Drill baby drill". But, U.S. oil production is already near record highs, and new drilling takes months to come online. This won't help gas prices next week.
What History Tells Us
We've seen oil shocks before. Here's what happened:
1990 — Gulf War (Iraq invades Kuwait)
Oil doubled from $17 to $36/barrel
S&P 500 dropped 15.9%
U.S. entered a recession
Recovery: Once the U.S.-led coalition succeeded militarily, oil fell back and markets recovered within months
2022 — Russia invades Ukraine
Oil hit $124/barrel
S&P 500 dropped 7.4% (less severe because Russian supply wasn't actually cut off)
Gas hit $5+/gallon nationally
Recovery: SPR release + Russian oil finding alternative buyers brought prices down over 6 months
2026 — Iran War (NOW)
Oil hit $119.50/barrel (and climbing)
Strait of Hormuz closed. 20% of global supply actually disrupted (unlike 2022)
This is more severe than both previous crises because the supply is genuinely offline
What This Means for Your Money
Gas prices: If oil stays above $100, expect gas prices to hit $6-$7/gallon within weeks. In 2022, $124 oil = $5.01/gallon national average. We're headed there again, possibly higher because the supply disruption is worse.
Stocks: Every major oil shock has caused a stock market selloff. The S&P is already sliding. If you're invested, expect volatility. But historically, markets recover within 6-12 months once the crisis stabilizes.
Inflation: Higher oil = higher prices on everything. Gas, food (shipping costs), flights, heating. The Fed was already battling inflation. This makes their job harder.
The silver lining: Oil shocks are temporary. Every single one in history has resolved. The question is whether it takes weeks (fast military resolution) or months (drawn-out conflict). Trump's "plan". Whatever it is, will determine the timeline.
The Bottom Line
Trump says he has a plan. The market is waiting to see it. Until then:
Expect gas prices to surge in the next 2-4 weeks
Don't panic-sell stocks — oil shocks cause drops, but recoveries follow
Watch the Strait of Hormuz — when it reopens, oil crashes back down
G7 strategic reserve release could provide short-term relief this week
The next 2 weeks will determine whether this is a short shock or a prolonged crisis. We'll be tracking every development.
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