Iran "Prepared for All Options"... Trump Unveils Fuel Tax Card as Oil Prices Soar

Rising International Oil Prices Amid Fragile Ceasefire
Increased Inflationary Pressure Ahead of November Midterm Elections
Push for Temporary Suspension of Gasoline Tax

U.S. President Donald Trump likened the ceasefire to "life support" and hinted at the possible resumption of "Project Freedom," prompting Iran to respond that it is "prepared for all options." As tensions in the Middle East once again rise and international oil prices have surpassed $100 per barrel, President Trump has proposed a temporary suspension of the federal gasoline tax to ease the burden of soaring gas prices.

Iranian Speaker Ghalibaf: "All Options Are Ready"

Mohammad Bagher Ghalibaf, Speaker of the Iranian Parliament's Social Networking Service (SNS)

On May 11 (local time), Iran immediately countered President Trump’s hardline remarks. Mohammad Bagher Ghalibaf, Speaker of the Iranian Parliament and head of Iran’s delegation in the previous peace talks, wrote on the social networking service X (formerly Twitter), "Our military is fully prepared to respond decisively to any aggression," adding, "We are ready for all options, and they will be astonished by our response."

He also criticized the United States, stating, "Wrong strategies and decisions always lead to wrong outcomes."

In a subsequent post, Speaker Ghalibaf stated, "There is no alternative but to accept Iran’s rights as stipulated in the new 14-clause proposal. Any other approach will end up completely inconclusive and will only result in repeated failure."

The new proposal reportedly includes U.S. payment of war reparations, recognition of Iran’s sovereignty over the Strait of Hormuz, and the lifting of U.S. sanctions. The New York Times, citing Iranian experts, reported that Iran’s approach reflects a leadership emboldened by having survived attacks from the United States and Israel.

In contrast, President Trump said at the White House that the U.S.-Iran ceasefire is "incredibly weak and at its weakest point," adding that "it’s on massive life support and the doctor comes in and says there’s about a 1% chance." Regarding Iran’s new proposal, he expressed strong dissatisfaction, describing it as "unacceptable and stupid."

That same morning, during a Fox News interview, President Trump also mentioned the possibility of resuming Project Freedom, the halted military operation against Iran. He had launched Project Freedom on May 4 to rescue ships trapped in the Strait of Hormuz but suspended it the following day, citing progress in ceasefire negotiations with Iran.

Proposal to Suspend Gasoline Tax Amid Rising Oil Prices... Effectiveness in Question

Fears of a ceasefire collapse immediately drove up international oil prices. On this day at the New York Mercantile Exchange, June West Texas Intermediate (WTI) crude rose 2.8% from the previous session to close at $98.97 per barrel. At the ICE Futures Exchange, July Brent crude rose 2.9% to finish at $104.21 per barrel.

With hopes for an end to the conflict between the United States and Iran fading rapidly, concerns emerged that the energy supply crisis could last longer than expected. Recently, Morgan Stanley also diagnosed in a report that the international crude oil market is now in "a race against time." The report analyzed that "if the blockade of the Strait of Hormuz continues through late June or July, spot prices for Brent crude could experience a sharp correction."

The impact of higher oil prices is already being felt in daily life. According to the American Automobile Association (AAA), as of May 11, the average price of gasoline nationwide in the United States was $4.520 per gallon. This is a 42.6% surge compared to the average price of $2.980 on February 28, the day the Iran war began, and it is also higher than last year’s average of $3.135.

According to data from the Department of Energy, U.S. gasoline inventories are nearing a seasonal 10-year low. Bloomberg reported that in the Midwest, where gasoline prices at gas stations have risen the fastest, seasonal gasoline inventories have fallen to the second lowest level on record.

In response, President Trump announced plans to temporarily suspend the federal gasoline tax (18.4 cents per gallon). He emphasized the need to ease consumer burdens, stating, "It’s not a huge amount, but it’s still money." Gasoline is subject to a federal tax of 18.4 cents per gallon. Congressional approval is required to suspend the gasoline tax. Republican Senator Josh Hawley of Missouri immediately announced he would sponsor related legislation.

However, skepticism about the effectiveness of the measure abounds. The Bipartisan Policy Center estimates that a federal gas tax holiday would lower prices by only 10 to 16 cents per gallon. This is limited compared to the $1.54 increase in gasoline prices since the war began. Patrick De Haan, Head of Petroleum Analysis at GasBuddy, said, "It’s like putting lipstick on a pig," pointing out that "the fundamental problem remains unsolved."

The market is also paying attention to the possibility that the energy shock from the Middle East could once again fuel inflation in the United States. The Consumer Price Index (CPI) for April, due to be announced this week, is expected to rise more than anticipated due to higher gasoline and airfare prices. This could act as a factor further diminishing expectations for a Federal Reserve interest rate cut.

On this day, Matt Hornbach, Global Head of Macro Strategy at Morgan Stanley, said in an interview with Bloomberg, "This Tuesday’s CPI print is likely to be a bit spicier," adding, "What matters is how this week’s inflation data translates into the outlook for Personal Consumption Expenditures (PCE) inflation."

This content was produced with the assistance of AI translation services.