It is reported that the Trump administration has ruled out the option of having the Treasury Department trade oil futures, considering the market volume too large and the intervention effect limited, while remaining cautious about the option of releasing oil reserves. What measures does the White House have left to curb oil prices?
According to Bloomberg, the Trump administration has currently ruled out the option of the Treasury Department participating in oil futures transactions, even as it attempts to stabilize energy prices that have been rising due to the U.S.-Israel-Iran conflict.
The report noted that government officials had discussed having the Ministry of Finance intervene in energy futures trading, but believed that the agency's ability to have a substantial impact on the market was limited. He pointed out that during the period of conflict, daily trading volumes in the oil futures market surged significantly, diluting the potential influence of any single participant.
The report also mentioned that the government is cautious about immediately tapping into the Strategic Petroleum Reserve (SPR), as a significant amount of reserves were released during the Biden administration, leaving the current reserve level at only about 60%. The frequent releases have caused additional issues such as facility wear and deferred maintenance. However, if the government ultimately decides to utilize this tool, even a modest release could send a strong reassuring signal to the market.
The drawbacks of some of the options discussed highlight the challenges the White House may face in seeking measures to cool down the recent surge in global energy prices. The spike in oil prices not only poses geopolitical risks for the White House but also creates domestic political difficulties — with Trump attempting to prove to voters ahead of the November midterm elections that his administration is reducing living costs.
Brent crude oil surged by 17% this week, potentially marking the largest weekly gain since 2022. On Friday, prices briefly retreated after Trump hinted at taking 'immediate action' to ease pressure on oil prices, while the Treasury Department issued a temporary waiver allowing Indian refiners to purchase Russian oil until early April.
However, as of the time of writing, both WTI and Brent crude have resumed their upward trajectory.
Previous related article:Trump Expresses No Concern About Oil Prices, Senior Official Mentions Exploring All Options to Lower Prices, Treasury May Intervene for the First Time
Earlier this week, Trump also announced plans to provide insurance guarantees and potentially dispatch naval escorts to ensure safe passage for oil tankers and other vessels through the Strait of Hormuz.
U.S. Interior Secretary Doug Burgum said on Thursday that the administration is weighing a range of options to address the surge in oil and gasoline prices during the war.
“All options are on the table,” Burgum said in an interview, noting that the list includes measures that can produce immediate effects as well as longer-term, more complex options. Burgum is scheduled to meet with Trump in Washington on Friday afternoon local time.
Analysts and Washington insiders pointed out that the administration could also consider other options, including exemptions from fuel blending requirements.
Speaking about the insurance guarantee program, Burgum stated: “The federal government has an opportunity to step in and restore some order. The U.S. can assume part of the risk to ensure sufficient supply for global allies. Only we can do this because we possess financial strength and naval power.”
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