The Trump administration is weighing a range of options to address a spike in oil and gasoline prices, including providing insurance guarantees for tanker shipments and possible U.S. naval escorts through the Strait of Hormuz, as the conflict with Iran threatens global energy supplies, Bloomberg reports.
Surging oil costs pose both a geopolitical risk for the White House and a domestic political challenge for President Donald Trump as his administration tries to contain energy-driven inflation and convince voters it is lowering the cost of living ahead of the November midterm elections.
FUEL BLENDS
Interior Secretary Doug Burgum Thursday said the administration was weighing a range of options to address the spike in oil and gasoline prices tied to the war in Iran.
“Everything is being considered,” Burgum said in an interview, adding that the list includes possible actions that would have immediate impact as well as longer-term and more complex options.
Analysts and others in Washington have also pointed to additional measures the administration could consider, including waivers of fuel-blending requirements aimed at boosting available fuel supplies.
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“We have an opportunity as the federal government to come in and establish, I would say, some normalcy,” Burgum said about the plan to provide insurance guarantees.
“The U.S .can take on some risk to help make sure that our allies in the world are well supplied, and we’re the only ones that could do that, because we’ve got the financial power and the naval power to make that happen.”
Burgum is scheduled to meet with Trump on Friday afternoon in Washington.
Trump announced plans earlier in the week to provide insurance guarantees and possible naval escorts to ensure safe passage for oil tankers and other vessels moving through the Strait of Hormuz, a key global chokepoint for crude shipments.
Oil prices had retreated slightly Thursday after Trump signaled “imminent action” to reduce pressure on energy markets.
OIL FUTURES TRADES
The administration is ruling out deploying the Treasury Department to trade oil futures for now, according to a person familiar with the matter, as officials search for ways to tame energy prices that have climbed amid the Iran war.
Administration officials have discussed getting the Treasury involved in selling and buying energy futures but believe the agency’s ability to meaningfully affect the market is limited, said the person, who requested anonymity to discuss private conversations.
Daily activity in the oil futures market has ballooned amid the conflict, diluting the potential impact of any one participant, the person said.
The administration is also hesitant to tap the Strategic Petroleum Reserve immediately because it was heavily utilized under former President Joe Biden, leaving it only about 60% full, the person said.
Damage caused by frequent withdrawals and the need for deferred maintenance pose additional complications.
However, if the administration eventually opts to pull that lever, even releasing a modest amount could send a signal aimed at calming markets.
Oil is on course for its biggest weekly surge since 2022 as Brent has rallied aout 17%.
Brent crude was trading around $87–$89 per barrel Friday, while the U.S. average price for regular gasoline stood at about $3.32 per gallon, according to AAA.
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