CME CEO Warns: Trump Administration Intervention in Oil Futures Would Be "Biblical Disaster"

U.S. intervention in oil futures would be ‘biblical disaster,’ CME warns

Terry Duffy says that if the Trump administration tries to suppress prices through derivatives markets, it will undermine market confidence

Chief Executive Officer of CME Group

CME Group CEO Terry Duffy warns that if the Trump administration attempts to lower oil prices during the Iran conflict by intervening in derivatives markets, it could trigger a “biblical disaster.”

The operator of the U.S. crude oil futures platform, CME Group CEO Terry Duffy, said at a conference this week that government intervention in futures markets to curb rising oil prices would erode market confidence.

He pointed out that if investors lose faith in the market’s ability to price key commodities, such measures could lead to a “biblical disaster.”

Duffy made these remarks after a Reuters report suggested that the U.S. Treasury Department is considering measures to lower oil prices, including market interventions.

On Wednesday, the Trump administration announced the release of several million barrels of oil from strategic reserves to prevent a price shock — its latest attempt to curb rising crude prices.

Analysts say the government might take other steps, such as temporarily suspending federal gasoline taxes, easing fuel environmental regulations, or temporarily banning U.S. oil exports.

However, recent sharp volatility in oil prices has sparked speculation among energy traders that the U.S. Treasury may have already intervened in the futures market. On Monday, Brent crude surged to nearly $120 per barrel before sharply reversing to below $100.

Tim Skiro, head of derivatives at Energy Aspects, said the consultancy has been receiving ongoing inquiries from clients this week about whether the recent series of large, unexplained trades are related to government actions.

Skiro said, “Clients keep asking us who the big seller is.”

He added, “Some speculate it could be the U.S. Treasury.” He noted that the U.S. government has previously intervened in other markets, such as the foreign exchange market.

A consulting firm founded by former White House energy advisor Bob McNally, Rapidan Energy Group, said this week that while such government actions would be “unprecedented,” it is clear that “the idea of the U.S. Treasury selling near-month crude futures” is “drawing more attention than usual.”

In a report to clients, Rapidan analysts wrote, “Given the current panic, we cannot rule out this possibility.”

The U.S. Treasury declined to comment on these speculations. A person familiar with Treasury Secretary Scott Bessent’s thinking said the agency has not intervened in the oil market.

A Department of Energy spokesperson said the department is not involved in oil derivatives trading and has not advised other government agencies on such actions.

Other government measures this week have also attracted attention in the oil market.

On Tuesday, U.S. Energy Secretary Chris Wray posted on social media that the U.S. Navy had escorted an oil tanker through the Strait of Hormuz, surprising traders and causing a sharp drop in prices. The post was deleted within minutes, and the White House later denied that the Navy had escorted any ships through the strait.

London-based PVM Oil Associates analyst John Evans wrote on Thursday that it’s unclear whether Wray’s post was “another example of complete incompetence or a more serious prank.”

Wray said on Thursday that naval escorting is unlikely to begin before the end of the month.

Published in: The Financial Times (UK)

Author: Jamie Smyth

https://www.ft.com/content/823657f2-4f8b-4325-88db-fbbdba6c9e17

Translation: 24-Hour Observatory