Trump has no remaining levers to pull as oil hovers near the $100 ‘psychological’ threshold

President Donald Trump is essentially out of “levers” to pull during a second phase of the Iran war as oil prices again flirt with the $100 per barrel “psychological” threshold that makes energy markets jittery.

With global oil and fuel emergency reserves already dwindled and fighting spreading to the Red Sea—Saudi Arabia’s alternative outlet for oil exports—the concern is the U.S. faces either escalation or capitulation, energy and geopolitical analysts said. That means expanding the military operation to include so-called boots on the ground or ceding the now-infamous Strait of Hormuz to Iran to control and charge de-facto tolls, called service or administrative fees in a thinly veiled effort to avoid violating international maritime laws.

The big question now is whether Trump—after some short-term period of escalation—will choose the so-called “TACO” route, said Dan Pickering, founder of the Pickering Energy Partners consulting and research firm. The “Trump Always Chickens Out” term was coined last year after Trump repeatedly backed down from higher tariffs and other threats. And market sentiments remain that something will likely have to give well before the November midterm elections.

“You either ‘TACO’ or you turn up the heat—and things get worse before they get better,” Pickering told Fortune. “If you think that the midterms are the pressure point, doing something that influences price and sentiment in the short run just looks challenging.” 

After the interim peace deal was shredded and the military conflict escalated earlier this month, oil prices rapidly rose........

© Fortune