WTI, Brent Crude Rise Over 4% as Trump Floats Gas Tax Holiday, Israel-Iran Tensions Simmer

Oil prices climbed sharply Tuesday morning, adding to recent gains as political discussions about a potential federal gasoline tax holiday merged with simmering supply concerns in the Middle East.

West Texas Intermediate (WTI) crude rose $4.11, or 4.11%, to $102.41 per barrel. Brent crude, the international benchmark, gained $3.29, or 3.16%, to trade at $107.59. Natural gas prices also moved higher, up $0.08 to $2.83 per MMBtu.

The Bakken crude differential at Clearbrook, Minnesota, was quoted at $-3.42 per barrel versus WTI, maintaining the wide discount that has characterized the local grade for months.

The price rally coincides with political headlines. Former President Donald Trump told CBS News Monday that he favors the idea of a temporary federal gas tax holiday. “I think it’s a great idea,” he said, suggesting the tax could be removed “for a period of time” until prices recede. Current Energy Secretary Chris Wright echoed that sentiment Sunday, stating the administration is “open to all ideas” for lowering pump prices.

The federal tax on gasoline is $0.184 per gallon, with diesel taxed at $0.244. The revenue funds highway projects. Suspending the tax has been discussed during previous price spikes, including in 2022, but Congress did not act.

Market observers note that prices are already up significantly in recent weeks. Since the start of the Israel-Hamas war, U.S. retail gasoline prices have jumped by roughly 50%. Tensions escalated over the weekend as Iran launched missile attacks on Israel, Israel carried out a retaliatory strike. The key Strait of Hormuz, a vital oil transit chokepoint, remains a focal point for supply fears.

Consumer sentiment has been dampened by the high fuel costs. The latest University of Michigan survey showed sentiment at its lowest level since 1952, with many consumers citing gasoline prices. Analysts suggest that until concrete supply disruptions occur in the Middle East, prices may remain volatile but are unlikely to sustain these peaks long-term. However, the prevailing market mood is one of caution, supporting higher prices for now.

For operators in the Bakken, the wide differential to WTI means realized prices remain substantially lower than the headline benchmark. However, any broad increase in crude benchmarks provides a revenue uplift. The current differential reflects continued pipeline takeaway capacity and regional refining dynamics.