The Middle East will once again dominate the headlines on the homepage in the coming days. As promised during his campaign, newly elected US President Trump has already seen the Middle East and North Africa already in the Middle East and North Africa as his statements about Gaza, Israel and Iran are unlikely to support stability. It puts vulnerable security situations at risk. At the same time, the Washington administration is pursuing a full-scale oil-gas conflict between OPEC+ and Iran. Already, Gaza-based extremist group Hamas has delayed the extradition of Israeli hostages, but Iran has openly confronted Trump’s tactics, showing no signs of retreating in the near future.
As some analysts have said, the next five days could shape a new reality in the Middle East. Washington is also increasing pressure on Moscow, as demonstrated by the unexpected flight of US envoys to Moscow today. As trading president, Trump uses his famous street tactics honed from his experience in US real estate to pressure all his enemies to embrace new geopolitical rules. The Washington Strongman shows that he is following his statement.
Related: Crude oil prices go against Trump’s trade tariffs
Trump’s latest actions are clear. He implemented another tariff scheme targeting the global aluminum and steel sectors, and frankly warned Hamas to hand over all Israeli hostages by noon on Saturday. If this demand is not met, Trump declared, “All hell will be loosened.” Combined with his previous statement that the US should take control of Gaza and move Palestinians to Egypt and Jordan, Trump has put Arab allies in a difficult position. Beyond the usual media frenzy following Trump’s statement, current tensions in the Middle East are escalating. Saudi Arabia, Egypt and Jordan have publicly criticised Trump’s approach, warning Washington to reconsider whether he doesn’t want to lose regional influence. Meanwhile, Trump’s decision to save Israel underscores Washington’s commitment to current strategy, bringing a full-scale conflict between the United States and its Middle Eastern allies, and is no longer an unlikely scenario.
At the same time, Trump’s economic measures, particularly the new tariffs and his “drill, drill” strategy, are urging oil and gas companies to strengthen production and increasing pressure on OPEC+. Without a clear overall strategy, Trump is trying to expand production and exports of international oil groups (mainly Arab national oil companies and non-OPEC producers such as Russia and Kazakhstan). Sector analysts and American oil companies have already shown that Trump’s “drill, baby, drill” campaign is unrealistic, warning that OPEC+ will not be able to follow immediately. Additionally, Trump’s new tariffs on steel, aluminum and other products have a debilitating effect on global oil and gas demand. Major economies like China and India face higher costs and reduce exports. OPEC, particularly Saudi Arabia and the United Arab Emirates, together with OPEC+ Ally Russia, deals with a new US administration that prioritizes the “MAGA”-led economic framework for international norms. OPEC had already planned to increase exports by March 2025, but Trump’s approach could constrain these plans. As most Arab oil and gas have been headed towards Asia for years, new US tariffs on China and India, which had continued sanctions on Russia and Iran, further complicating the landscape of the National Oil Company . Trump’s attitude is clear. The first of America – everything else must obey.
In the coming days, the biggest risk is the potential resumption of the Israel-Gaza War, in which the Arab regime is in severe tension. Meanwhile, Washington appears to be taking an increasingly aggressive stance against Iran and Russia. New actions or sanctions against Iran are expected, and negative consequences from the Moscow meeting could further heighten tensions. Trump’s 110% support for Israel is another potential flashpoint. If negotiations between Hamas and Israel cannot ensure the release of all hostages, Israeli Prime Minister Benjamin Netanyahu was given a green light to resume military action. US analysts have shown that Washington is currently not planning military action against Iran, but at the same time, Israel is empowered to adopt a hardline approach. Tehran understands the risks, but the regime’s leadership, particularly the Islamic Revolutionary Guard (IRGC), appears willing to take gambling.
The current situation is bullish for the oil and gas markets. While new threats of military conflict in the Middle East are emerging, many OPEC producers struggle to meet even existing export allocations. The wildcard in this scenario, Russia faces challenges not only from the ongoing attacks on Ukraine’s refinery sector, but also from the prolonged impact of Biden-era sanctions on the dark fleet of Russian oil tankers. The future of Moscow looks increasingly uncertain.
Oil prices are expected to rise due to increased instability in the Middle East, potential military conflicts on the horizon, and concerns over the stability of Egypt and Jordan. If the Gaza War resumes or tensions escalate with Iran, oil prices can easily break $90 per barrel. Even OPEC’s decision to suddenly increase export quotas may not hinder price increases as key producers find themselves caught up in geopolitical crossfires.
cyril wildershoven for ofileprice.com
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