U.S. Treasury officials are preparing to announce measures aimed at tempering recent increases in energy prices, with an announcement possible as soon as Thursday, according to a senior White House official. Among the options under consideration is action that would directly involve the oil futures market.
If implemented, that approach would be notable for its reliance on financial-market mechanisms instead of interventions in the physical supply of crude. Officials are reported to be moving quickly to try to mitigate the political and economic consequences associated with higher fuel costs.
Market prices have moved higher in recent sessions. Brent crude has risen to roughly $85 a barrel amid worries that the conflict could disrupt maritime flows through the Strait of Hormuz. That shipping lane accounts for about a fifth of global oil shipments, and concerns about its security have been cited in recent price moves. At the same time, U.S. retail gasoline prices have climbed above $3 per gallon.
The contemplation of futures-market measures reflects an attempt to influence price formation on exchanges rather than directly altering physical inventories or shipments. The senior White House official described the possibility of such steps, but provided no further detail in the account available.
A Treasury spokesperson could not be immediately reached for comment.
Context and outlook
The proposed focus on futures markets would represent an atypical tool in the policy mix for addressing energy-price shocks. Officials are apparently weighing the relative merits of financial-market tools against the traditional levers tied to physical crude reserves and supply management as they seek to blunt the immediate impact of rising pump prices and crude valuations.
The scope of any forthcoming measures, their design, and their likely market effects were not specified in the information provided.