One of the most dangerous illusions in Washington is the belief that war and energy shocks are temporary. Politicians always assume that prices will spike briefly and then return to normal as if the world economy operates like a thermostat that can simply be turned down once the crisis passes. History shows the opposite. Wars, especially those centered around energy chokepoints, rarely produce transitory economic consequences.
Treasury Secretary Scott Bessent recently tried to calm markets by claiming that crude markets remain stable, insisting that “the crude markets are very well supplied” and pointing to “hundreds of millions of barrels on the water away from the Gulf.” He has also suggested that Washington could simply release additional Russian oil from sanctions if needed to increase supply. This thinking reflects the typical Washington view that governments can manage the global energy market with policy tweaks.
At the same time, the administration issued a temporary waiver allowing India to purchase Russian crude in order to ease global supply pressure created by the Iran conflict. Bessent described the measure as a stop-gap that would “alleviate pressure” on oil markets while the crisis unfolds. The logic from Washington is straightforward: increase supply temporarily, calm the markets, and assume prices will fall once the conflict subsides.
President Trump has taken a similar position. Responding to rising gasoline prices, he argued that “short term oil prices… will drop rapidly when the destruction of the Iran nuclear threat is over,” adding that higher prices were “a very small price to pay” for global security. The assumption here is that the war will be brief and the energy shock temporary.
Energy markets are not reacting merely to current supply but to geopolitical risk. Roughly 20% of the world’s oil moves through the Strait of Hormuz, meaning even the threat of disruption can send prices sharply higher. Once markets begin pricing geopolitical risk into commodities, those price movements can persist long after the initial military event.
Indeed, the market response already demonstrates that the shock is not trivial. Oil prices surged above $100 per barrel and analysts warn that gasoline in the United States could soon approach $4 per gallon as the conflict spreads through the region. Diesel prices are rising even faster, which will ripple through transportation, agriculture, and manufacturing. When diesel rises, everything from food to shipping costs follows.
The deeper problem is that wars rarely remain contained. Washington may believe this operation will last weeks, but history suggests otherwise. Iraq was supposed to be over in months. Afghanistan was expected to be quick. Both became decades-long conflicts because policymakers underestimated the geopolitical and cultural realities on the ground.
Energy markets understand this better than politicians. Traders are not simply reacting to headlines; they are assessing the possibility that the conflict spreads across the Middle East, disrupts shipping lanes, or triggers retaliatory strikes on energy infrastructure. Once that risk enters the equation, prices do not simply snap back.
There is also the structural issue that Washington prefers to ignore. For years, Western governments discouraged investment in energy production while simultaneously increasing global demand. That created a fragile supply structure where any geopolitical disruption can trigger a major price surge.
The idea that the energy shock will be temporary is therefore a political narrative, not an economic reality. Governments want the public to believe that higher gasoline prices are merely a short-term inconvenience. Markets, however, are signaling something very different.
