Experts Comment: What Moves Can Trump Make to Lower Fuel Prices?

Geopolitical risks in the Middle East, particularly following the end of an agreement between the United States and Iran, have spurred an increase in oil prices. However, the approaching November midterm elections in the US create a strong motivation for the Washington administration to curb sharp price rises.

Brent crude oil experienced a significant jump of 43% in the first three weeks after the conflict began, reaching $119.5 per barrel. In the subsequent three weeks after the agreement's end, the increase was more moderate at 24%. The price hovered around $102 at one point during the week before falling below $97 at closing.

Several factors are contributing to this limited price movement. These include the absence of expected physical supply losses, high existing stock levels, and the political objectives of US President Donald Trump. Homayoun Falakshahi, a Senior Oil Specialist at Kpler, highlighted that oil volumes at sea reached a record 1.35 billion barrels in June, with China's substantial stockpiles providing market flexibility. Falakshahi also noted that Trump's administration is motivated to control fuel prices ahead of the November elections, a factor that has curbed speculative buying and influenced short-term expectations.

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The children are the most stressed. They think the fire is going to burn down the house, but we're coping.

Fereydoun Barkeshli, head of the Vienna Institute for Energy Research, believes the market is entering a speculative phase where participants are pricing in normalization rather than crisis. He observes that reactions to Middle Eastern developments are weaker compared to the initial days of the conflict and suspects that futures markets may be manipulated to suppress prices. Barkeshli points out an unusual divergence between futures and physical markets, driven by Trump's advocacy for low oil prices and media narratives shaping perceptions.

Aaron Kildow, Operations Manager at Sparta Commodities, emphasizes that the Trump administration's options for lowering oil prices before the midterm elections are limited. While a temporary restriction on refined product exports is theoretically possible, it could have significant and undesirable consequences for allied nations. Kildow asserts that the most effective solution is to end the conflict and normalize supply flows. He also adds that the US's increasing production of light crude oil cannot fully replace the medium-density oil from the Persian Gulf, and lasting relief is not expected until shipments return to normal.

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At 3pm, we were told, 'You have to evacuate.' We saw columns of smoke, like a volcano about to erupt. So we left.