In this articleFollow your favorite stocksCREATE FREE ACCOUNTGas prices at a Shell Station located on Foothill Blvd. Robert Gauthier | Los Angeles Times | Getty ImagesRising oil prices may not just be a headwind to President Donald Trump’s fight to lower inflation. They could also undermine his signature legislative achievement. Almost all of the economic effect of the individual tax cuts in the “big beautiful bill” — from both smaller withholdings and sweetened tax refunds — could be erased if oil prices remain elevated by more than $20 compared to before the U.S.-Iran war, according to Raymond James. “With the $25 move last week, if the oil price stays here, it essentially offsets the fiscal benefit from the OBBA,” wrote strategist Tavis McCourt in a note.McCourt’s analysis relies on applying any increase in oil market prices to the more than $420 billion that consumers spent on gasoline in the fourth quarter of 2025. He told CNBC in an interview he accounted for both potential reduced demand due to higher prices and companies’ needs to pad margins in his calculations. That leads him to conclude a $20 move in oil prices could mean consumers spending $150 billion more at the pump. The Tax Foundation estimates that the big beautiful bill’s individual tax cuts total $129 billion for 2025, with the overwhelming majority of it set to appear through tax refunds this filing season. U.S. oil before the war on Feb. 27 closed at $67.02. As of Tuesday morning, after a major whiplash in prices on Monday, oil is still trading more than $20 a barrel higher at $88.20. [embedded content]@CL.1 since Feb. 27 chart. Stephanie Roth, chief economist at Wolfe Research, said in a Monday interview her estimations for the hit consumers could take with elevated oil prices are also similar to the elevated spending she projected from the tax law. Though Wolfe in a Tuesday note said oil prices would need to remain above $100 for some time for that to happen. “In all these scenarios, it has to last longer than it is now,” Roth said. “The impact on gas prices so far has been short-lived, and modest compared to how it may ultimately play out.”But it will take time for oil prices to come down even if an end to the war in Iran arrive …
