Treasury Secretary Scott Bessent has officially dismissed speculation that the U.S. government will short oil futures to suppress surging energy prices, opting instead for a temporary easing of sanctions on stranded Russian crude to combat the supply shock stemming from the Iran-U.S. conflict.
Quashing Financial Intervention Rumors
Appearing on CNBC‘s “Squawk Box” on Monday, Bessent firmly shot down reports that the Treasury Department planned an unprecedented intervention in the commodities market to cool prices.
“That rumor’s in the market,” Bessent told CNBC. “When there’s big dynamic price action, that always happens. We haven’t done that.”
The initial speculation, which drew sharp criticism from market experts like Michael McClain, an Alternative Investment Research Analyst at LPL Financial, warned of a potential “whipsaw” effect, suggesting the administration would use the Exchange Stabilization Fund to short the oil futures market.
However, Bessent questioned the legality and feasibility of such a move, stating, “I’m not sure under what authority or what auspices” the Treasury could execute such financial trades.
The ‘Stranded’ Russian Oil Fix
Rather than utilizing financial engineering, the Treasury is pulling levers in the physical market. To offset the global supply disruption, the administration has authorized a temporary waiver allowing countries to purchase Russian oil currently “stranded at sea.”
Bessent described the move as a “narrowly tailored, short-term measure” designed to increase existing global supply without undermining the broader sanctions regime against Moscow.
Because the waiver applies strictly to oil already extracted and in transit, officials argue the financial upside for Russia is minimal.
“This will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction,” Bessent clarified on March 6.
Market Impact And Outlook
The dual approach—rejecting paper market manipulation while increasing physical flow—comes as energy markets face extreme volatility. Tensions from the Middle East conflict pushed Brent crude futures to $107.24 and WTI crude futures to $93.84 per barrel, at the last check.
The United States Oil Fund LP (NYSE:USO) remains highly active, tracking significant year-to-date gains of 68.28% amid the ongoing geopolitical turmoil.
USO was also up 59.63% and 62.05% over the last six months and the last year. However, it fell 0.87% over the last five days. On Thursday, it fell 3.54% to $117.36.
Meanwhile, the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 and Nasdaq 100, respectively, closed lower on Thursday. The SPY was down 0.25% at $659.80, while the QQQ declined 0.32% to $593.02.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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