March 5 (Reuters) – The U.S. Treasury Department could announce measures on Thursday to address rising energy prices, potentially including action in the oil futures market, a senior White House official said.
Global oil prices have risen since the war with Iran began on Saturday, as the expanding conflict disrupts supplies from the Middle East. (EITHER)
JOHN PAISIE, PRESIDENT OF STRATAS ADVISORS
“It could curb speculation with traders knowing that the US government is taking the opposite side – which should moderate the rise in oil prices – but it does not resolve the physical supply disruption, which is significant with the Strait of Hormuz closure, and there is no spare capacity outside the Gulf.
“Ultimately, if substantial volumes of oil are kept out of the market, financial manipulation is not going to work. Traders will continue to bet that the price of oil will rise, because the price should be higher.”
PHIL FLYNN, SENIOR ANALYST AT PRICE FUTURES GROUP
“This is a very novel and innovative move. Instead of using physical barrels to try to alleviate market concerns, futures can be used to sell the front end of the curve and buy the back end.
“The Treasury’s traditional role focuses on fiscal policy, debt management and occasional interventions in currency markets through mechanisms such as the Exchange Stabilization Fund, but not on commodities such as oil.”
TONY SYCAMORE, IG MARKET ANALYST
“If they go ahead and try to influence the futures contracts themselves (deliverable futures contracts), it could create a short-term pause or spook some speculative long positions, but I would be surprised if it moves the needle significantly beyond a day or two.
“The oil market is deep, global and driven by real supply and demand fundamentals, especially with tanker traffic already ‌choked in the Strait and trying to avoid the genuine threat of Iranian drone strikes and other attacks. A little Treasury pressure or symbolic action is unlikely to unlock or change that.”
ED MEIR, MAREX ANALYST
“I’m not sure what they have in mind, but if they intend to sell futures to drive prices down, this is a big gamble and will also involve unprecedented interference in crude oil markets.
“The question that immediately comes to mind is what happens if prices continue to rise and go against a possible Treasury short position? Will they use SPR oil to meet their short position or will they simply continue to book margin and hold their position?”
(Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Nia Williams)