US has discussed trading crude futures in order to lower prices: Burgum

Trump administration officials have held discussions about taking positions in crude oil futures markets in order to lower prices, US Secretary of the Interior Doug Burgum said March 14.

In an interview with Bloomberg TV in Tokyo, Burgum said he was not aware of any US government trading activity to date, but confirmed that it was among the actions that the administration of President Donald Trump had discussed as it attempts to stop oil prices from surging amid the war in the Middle East.

"Well, I'd say there's certainly been a discussion," Burgum said. "We've got a lot of smart people working in this administration. There's a lot of smart people in the energy trading market."

"Energy trading is one of the biggest markets in the world," he added. "An intervention, you know, to manipulate or lower prices would require enormous amounts of capital. That's all I'll say on that front."

The White House and spokepeople for the US Department of the Treasury did not respond March 14 to requests for comment.

Burgum's comments followed reports that the chief executive of CME Group, Terry Duffy, told a conference March 13 that the US would risk a "biblical disaster" if it intervened in commodity markets.

"Markets do not like it when governments intervene in pricing," Duffy said, according to multiple reports.

The conflict in the Middle East has caused severe disruption to tanker traffic through the Strait of Hormuz, seen multiple facility and terminal attacks, and forced Gulf producers to shut in production.

Platts, part of S&P Global Energy, assessed Dated Brent at $103.47/b March 13, up 46% from Feb. 27, before the war started. The Brent-Dubai spread was $7.29/b on March 13, down from a March 9 peak of $12.59/b, but up from $1.91/b on Feb. 27.

The Trump administration has attempted to tamp down rising prices with other government interventions, including a 172 million-barrel release from the US Strategic Petroleum Reserve and the creation of a shipping reinsurance program for tankers whose commercial insurance has been revoked. It was also considering revoking the Jones Act for US domestic shipping in an attempt to ease domestic trade flows, a White House spokesperson confirmed to Platts March 13.

On March 3, Trump said he would use the US Navy to escort tankers across the Strait, but no ships have been escorted to date.

Late March 13, Trump announced the US had struck military facilities on Kharg Island, Iran's largest crude export hub. He warned that Iran's oil facilities would be targeted next unless Iran allowed ships to pass through the strait.

"One way or the other, we will soon get the Hormuz Strait open, safe and free," Trump wrote on Truth Social March 14.