Demand Destruction Is The Reward Fossil Fuel Donors Get For Supporting MAGA

Nearly two years ago, a Republican presidential candidate promised oil and gas executives that a substantial campaign donation would secure favourable treatment if he won office. Following his narrow victory, the administration swiftly rolled back support for electric vehicles, renewable energy, and regulations limiting fossil fuel power generation, delivering on those promises. However, this apparent reward for fossil fuel backers took a dramatic turn when, in early 2026, the president launched an unprovoked military attack on Iran, triggering a geopolitical crisis with severe consequences for global energy markets. The attack led Iran to close the Strait of Hormuz, a vital chokepoint responsible for around 20 percent of the world’s oil and liquefied natural gas supply. This disruption has caused a sharp decline in oil inventories and a significant reduction in gasoline production in the United States. Analysts warn that gasoline prices could soon exceed $5 per gallon, with jet fuel shortages exacerbating the situation. The Financial Times highlights that without a diplomatic resolution, inflationary pressures will mount, and the economic fallout could be severe. Economic experts and market analysts are increasingly concerned about the rapid depletion of oil stocks and the limitations of strategic reserves. With inventories in OECD countries falling at an alarming rate and the flow of reserve releases constrained, oil prices face the risk of a sharp, non-linear rise rather than a steady increase. UBS analysts warn of heightened volatility and potential panic buying if the Strait of Hormuz remains closed, signalling a precarious and unstable energy market environment. Energy consultant Art Berman offers a sobering perspective, arguing that the current spike in oil prices should not be mistaken for the start of a sustained bull market. Instead, he describes it as a wartime surge occurring within an already debt-burdened global economy, which will ultimately suppress demand and weaken growth. His analysis suggests that while prices may reach extreme highs in the short term, the long-term outlook for oil is one of economic softness and structural challenges rather than prolonged prosperity for fossil fuel interests.