Trump Thinks He Can Magically Control the Price of Oil

And he has zero understanding of the complexity of the markets his Iran war is messing with.

Amid the deadly, illegal, half-baked war the U.S. and Israeli governments are waging against Iran, Donald Trump has managed to stick to his morning routine of shouting nonsense on social media. At 7:23 a.m. on Monday, Trump announced on Truth Social that the United States had engaged in “VERY GOOD AND PRODUCTIVE CONVERSATIONS” with Iranian negotiators “REGARDING A COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST.” The administration was sufficiently satisfied with the progress of those talks, he added, that it would postpone for five days—i.e., until markets close at the end of the week—the military strikes on Iranian power plants and energy infrastructure that he’d promised the previous night. Brent and West Texas Intermediate Crude oil futures promptly plummeted. The Dow Jones Industrial Average and S&P 500 accordingly posted their biggest one-day gains since February. Iran’s Foreign Ministry denied that the conversations Trump boasted about ever happened—but not before the oil traders who’d that morning placed $580 million worth of bets on oil futures dropping got a lot richer.

“The price of oil will drop like a rock as soon as a deal is done. I guess it already is today. We have a very serious chance of making a deal. That doesn’t guarantee anything,” Trump mused a few hours later, while talking to reporters. “All I’m saying is we are in the throes of a real possibility of making a deal. And I think if I were a betting man, I’d bet for it.”

Despite the president’s long-running fixation on oil—in the 1980s, Trump mulled drilling for it in Manhattan—his understanding of the industry has historically been a characteristically simplistic one: price down—good, price up—bad. He does seem to have figured out that well-timed statements can influence whether that price goes up or down; some unusually prescient oil traders got a lot richer this week as a result. But are Trump’s attempts to change the price of oil good for anyone who isn’t a betting man?

Oil isn’t cryptocurrency, or the stock market. It is a material thing that needs to be drilled, transported, stored, refined, sold, and delivered, all at considerable cost, all over the world. In fact, it’s many things: Different grades of crude have to be processed in different facilities, into different products. Benchmark prices and futures—somewhat recent phenomena—should ostensibly enable global oil market participants around the world to manage risks, and respond to events that might impact investment and purchasing decisions. Trying to rig oil markets like a casino’s slot machine makes the information those numbers are supposed to provide less useful, warping perceptions of how much barrels actually cost and what that entails for the broader economy. It could also be making it easier to ignore........

© New Republic