Oil above $101 puts Alaska's budget on a war in the Persian Gulf

Every dollar North Slope crude moves shifts Alaska's unrestricted general fund by roughly $35 million, according to the state Department of Revenue. Crude has moved a long way. Brent closed Wednesday at $101.25 a barrel, its highest since May, up about 14 percent in a month and about 52 percent from a year ago.

The cause is a war Alaska has no part in. The United States and Iran have been trading strikes around the Strait of Hormuz, the chokepoint through which roughly a fifth of the world's oil moves in peacetime. The U.S. military destroyed five Iranian tankers this week after Iran attempted to strike an American warship. Iran says it attacked two American vessels and eight tankers, and Houthi militants have hit energy infrastructure in southern Saudi Arabia.

Speaking at Joint Base Andrews, President Donald Trump said, "Oil is now back above $100 a barrel." On the international benchmark, he is right.

That is the number that matters in Juneau. At $35 million a dollar, the gap between the price the state budgeted on and the price crude is fetching now is the single largest variable in Alaska's finances, and nobody in the Capitol controls it. A $10 swing in either direction is $350 million.

Higher prices are not simply good news here either. When Gov. Mike Dunleavy signed the fiscal year 2027 budget, his administration said oil price volatility had driven up fuel, freight and construction costs, with rural school districts hit hardest.

Whether the price holds is a separate question, and the forecasts disagree. Trump predicted that right after the election oil prices would tumble and gasoline would fall below $2 a gallon. The federal Energy Information Administration expects Brent to average around $90 a barrel through the second half of 2026. Goldman Sachs has said Brent could exceed $120 in 2027 if Gulf output stays about 4 million barrels a day below prewar levels, though the bank does not treat that as its base case.