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By Hugh Cameron
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Oil prices could reach levels not seen since the height of the 2022 energy crisis if the United States deploys ground troops in Iran, a leading oil analyst has warned.
Last week, sources told CBS News that Pentagon officials were developing plans to deploy U.S. ground forces into Iran. Axios also reported that the administration was weighing up the prospect of occupying Kharg Island, a key Iranian oil export hub, in an attempt to pressure Tehran into loosening its blockade of the Strait of Hormuz.
Bob Yawger, energy futures strategist at Mizuho Financial Group, told Newsweek that the "first headline" of U.S. troops setting foot on Kharg Island would immediately drive oil prices $10-per-barrel higher than the roughly $107 at which Brent crude currently sits, and that it would continue to be felt "at least into May."
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He added that prices "could probably challenge the $130 high from the Russian war in Ukraine" depending on how the operation went.
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Prices Riding on ‘Forever War’ Fears
The U.S. launched an extensive bombing campaign against Kharg island, which President Donald Trump said "obliterated" all military targets on the island. It has also now deployed thousands of troops to the region.
Officials have yet to confirm any imminent ground incursion into Iranian territory, but they have not explicitly ruled out such plans.
"It’s the job of the Pentagon to make preparations in order to give the Commander in Chief maximum optionality," White House press secretary Karoline Leavitt told Newsweek when approached for comment. "It does not mean the President has made a decision, and as the President said in the Oval Office recently, he is not planning to send ground troops anywhere at this time.”
Speaking to reporters last week, Trump said he was not "putting troops anywhere."
"As President Trump always does, he's leaving all options on the table," Treasury Secretary Scott Bessent told NBC News on Sunday, adding: "What could happen with Kharg Island? We'll see."
Yawger said that should U.S. forces incur even a single casualty, oil prices would move "significantly higher."
He added that such an event would stoke fears of the U.S. becoming embroiled in another "forever war," prompting traders to price in possible implications even without an immediately supply disruption.
Iran’s Response to Losing Its Lifeline
Kharg island has been described as Iran’s "oil lifeline," and it is estimated that roughly 90 percent of its oil exports pass through the terminal before traveling through the Strait of Hormuz to nations around the world.
Tehran has warned of an "unprecedented response" should the U.S. launch a ground operation on the Island. Iran's parliament speaker Mohammad Bagher Ghalibaf said on Sunday that targeting of its oil and energy infrastructure would result in similar facilities in the region being "destroyed in an irreversible manner."
Yawger said another round of Iranian attacks against energy facilities in Qatar, the United Arab Emirates and other Gulf nations would push global oil prices close to the $130 mark, which has not been reached since March 2022.
He added that damage to Saudi Arabia's East-West Pipeline in particular - now a critical alternative route amid the Strait of Hormuz blockade - would mark "a next-level escalation" and drive prices "another leg higher."
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Yawger also said that any moves toward de-escalation would carry inverse effects and temper both oil costs and downstream products, including gasoline.
"My personal opinion on the whole ball of wax is that the president has to find an off-ramp by Memorial Day," he said. "He cannot afford to have the consumer paying $5 at the pump during summer driving season."
Trump has touted productive negotiations with Tehran regarding a "complete and total resolution of our hostilities," but Iran has publicly rejected his proposed terms for bringing the war to a close.
Update 3/27/26, 8:10 a.m. ET: This article was updated with a response from the White House.
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