Treasury Secretary Scott Bessent announced that the U.S. government will not intervene in oil futures markets during the ongoing Iran conflict, despite disruptions in supply linked to tensions around the Strait of Hormuz [1]. Instead, the administration is prioritizing measures to boost physical crude availability, including unsanctioning Russian oil cargoes estimated at about 130 million barrels and potentially unsanctioning approximately 140 million barrels of Iranian oil in floating storage [1]. Bessent stated, 'We’re not intervening in the financial markets. We are supplying the physical markets,' emphasizing a strategy of physical intervention rather than financial manipulation [1].
The coordinated supply response is designed to cushion the impact of any temporary disruption in shipping through the Strait of Hormuz, which handles about 20% of the world's oil supply [1]. Bessent explained that the combined unsanctioned oil could create about 260 million excess barrels, helping to cover a temporary deficit of 10 million to 14 million barrels per day if shipping is interrupted, providing roughly three weeks of market stabilization [1]. Additionally, a 400 million-barrel Strategic Petroleum Reserve (SPR) release—the largest coordinated SPR release in history—was approved last week, and Bessent indicated the U.S. could act unilaterally with another SPR release if necessary to keep prices down [1].
Bessent framed these actions as part of a broader effort to balance pressure on Iran with energy market stability, noting that the U.S. has avoided targeting Iranian energy infrastructure to preserve supply while maintaining pressure on Tehran [1]. He asserted that supplying more oil from Iran would ultimately lower prices in America, even though the U.S. does not rely on Middle East oil directly; the chokepoint at the Strait of Hormuz has indirectly strained supply and unsettled crude futures markets [1].
The Iranian regime is threatening to attack vessels crossing the strait without permission, further heightening concerns about supply disruptions [1]. Bessent concluded that the U.S. has 'lots of levers' and 'plenty more that we can do' to stabilize the market if needed [1].
CONCLUSION
The U.S. government is responding to the Iran conflict and potential oil supply disruptions by focusing on physical interventions, such as unsanctioning oil cargoes and releasing reserves, rather than intervening in oil futures markets. These measures aim to stabilize global energy markets and keep prices down, despite ongoing threats to shipping through the Strait of Hormuz. The market impact is high, given the scale of supply measures and the strategic importance of the region.