Politico reports:

The Trump administration believes it can withstand a brief spike in oil prices — for as many as four weeks, as one person close to the White House suggested — before the political hit does lasting damage.

Administration officials’ confidence was bolstered Tuesday when oil dropped to $80 per barrel, down from $120 this weekend, reinforcing their view that the spikes are temporary and manageable.

They have three to four weeks “where they can ride out what they need to” before oil prices become a more durable political problem, said the person close to the White House, who like others in this story was granted anonymity to share details of private conversations.

“Assuming the economy continues to turn around once the active part of the war is concluded, you’ll have the whole summer from May through August to ride the turnaround,” the person said.

A former Trump administration official added that the administration needs a “consistent, multiweek read” of oil prices before it shifts its approach.

“These temporary little gyrations are not what they’re going to be basing their policy on,” the official said.

Those two people, as well as a current U.S. official, said the administration never seriously considered altering its military strategy in the face of oil price hikes.

Still, the administration was caught off guard by the speed and severity of the Sunday spike, a fourth person close to the White House said.

“At the worst moments [Sunday] night, it was insane,” the fourth person said. “That definitely surprised me, and it absolutely surprised them.” [Continue reading…]

The Wall Street Journal reported yesterday:

For days, the global oil market has swung wildly while traders from New York to London to Singapore have watched footage of drones and missiles flying across the Middle East. Tuesday’s selloff was sparked in part by a social-media post.

A plunge in oil prices intensified in the early afternoon after Energy Secretary Chris Wright said on X that “The U.S. Navy successfully escorted an oil tanker through the Strait of Hormuz to ensure oil remains flowing to global markets.” The prospect of a prolonged energy shock momentarily dimmed. Futures for oil, diesel and gasoline slid. Stocks jumped.

But the message vanished within minutes, leaving investors the world over struggling to see through the fog of war emanating from the Trump administration itself.

U.S. officials soon after said that the military isn’t currently escorting commercial ships through one of the world’s chokepoints for oil and natural gas.

“A video clip was deleted from Secretary Wright’s official X account after it was determined to be incorrectly captioned by Department of Energy staff,” an agency spokesperson said. The administration is reviewing other options to resume tanker traffic, the spokesperson added, “including the potential for our Navy to escort tankers.”

The since-deleted post was enough to wipe out million-dollar trades. Benchmark U.S. crude futures plunged by as much as 19% at one point. During a roughly 10-minute span when Wright’s post appeared, an exchange-traded fund linked to oil futures saw $84 million of its market capitalization evaporate.

“That’s an unforgivable error right there,” said Robert Yawger, commodity specialist at Mizuho Securities.

Much of Wall Street has been waiting for President Trump to reverse course in the military campaign against Iran for fear that surging oil prices could slam the U.S. economy before midterm elections. As traders hang on every headline and speculators propel huge price swings that ripple through markets, Yawger added, “Where’s the line between fantasy and reality? It’s hard to say.” [Continue reading…]