From Trump’s abrupt reversal on releasing the Strategic Petroleum Reserve to the U.S. military striking Kharg Island—the key Iranian oil export hub

【Answer 1】 I. The International Energy Agency (IEA) announced the release of 400 million barrels of strategic petroleum reserves. To counter rising oil prices triggered by U.S. and Israeli airstrikes against Iran, U.S. President Trump stated in a media interview on March 11 that he would release U.S. strategic petroleum reserves. According to CCTV News, the U.S. Department of Energy said Trump had authorized it to begin releasing 172 million barrels of crude oil from the Strategic Petroleum Reserve starting the following week. Under the planned release schedule, delivery of this crude would take approximately 120 days. Commentators described this as the boldest measure taken by the White House to curb oil prices since the U.S. launched war against Iran. Earlier that day, the International Energy Agency (IEA) announced that its 32 member countries had unanimously agreed to release 400 million barrels of strategic petroleum reserves to address global oil supply tightness—a volume far exceeding the 182 million barrels collectively released after the outbreak of the Russia-Ukraine conflict in 2022. Japanese Prime Minister Sanae Takaichi also announced Japan’s intention to release petroleum reserves even before the IEA’s official announcement. Trump’s sudden shift in stance Amid escalating Middle East tensions, international oil prices surged sharply, briefly approaching $120 per barrel. High oil prices drove up domestic fuel prices across the United States. Data released by the American Automobile Association (AAA) on March 11 showed that the national average price for regular gasoline continued to rise, reaching its highest level in over 20 months. That day, the nationwide average price stood at $3.578 per gallon (approximately RMB 24.6), representing a cumulative increase of roughly 20% since February 26. According to Axios News, U.S. Senate Democratic Leader Chuck Schumer criticized the U.S.-Israeli military strikes against Iran for spiking gasoline prices on March 8 and urged President Trump to deploy the Strategic Petroleum Reserve to stabilize prices. “Gasoline prices have soared to multi-year highs due to Trump’s reckless launch of an unnecessary war,” Schumer wrote on X (formerly Twitter). “His response? ‘Let them rise.’ He simply doesn’t care.” Under mounting pressure, Trump had previously shown no inclination to release petroleum reserves. U.S. and European officials familiar with related discussions revealed that he had claimed the war with Iran “would end soon.” The Wall Street Journal, citing officials, reported that U.S. Energy Secretary Chris Wright conveyed the White House’s position to counterparts from G7 countries on the morning of March 10: given that oil prices had recently fallen below $90 per barrel, large-scale market intervention was premature. Yet, within two hours, U.S. officials reversed their stance and urged G7 counterparts to agree to a massive reserve release. A senior U.S. government official stated that this abrupt policy shift was entirely attributable to Trump changing his mind. The official explained that Trump had originally opposed releasing petroleum reserves early on March 10. However, after advisors informed him that such a move was essential to calm volatile oil markets, he reversed course and immediately instructed Wright to push for market intervention. At a rally in Kentucky on March 11, Trump praised the IEA’s initiative. For years, he had criticized the Biden administration’s use of the Strategic Petroleum Reserve in 2022. Deploying the Strategic Petroleum Reserve remains one of the few oil-price-influencing measures a U.S. president can unilaterally authorize.

U.S. diesel crack spread surges past $106 per barrel—setting a new all-time high—as Trump faces the 'midterm election shock'

【Answer 2】 On September 1, the U.S. diesel refining margin (i.e., diesel crack spread) surged past $106 per barrel—setting a new all-time high. Meanwhile, retail diesel prices approached $5.63 per gallon. This energy crisis, ignited by the war with Iran, is spreading across the entire economy—with diesel at its core—fueling inflation, depressing bond markets, dragging down equities, and imposing intensifying political pressure on the Trump administration just under two months before the midterm elections. Soaring diesel prices directly impact agriculture, trucking, and winter heating demand—and politically threaten the Republican Party’s electoral base in traditionally conservative (‘red’) states. On September 1, Trump urgently convened a meeting at the White House with major U.S. refiners—including Marathon Petroleum, Phillips 66, Chevron, Delek US Holdings, PBF Energy, and Valero Energy. According to insiders cited by the Financial Times, the meeting focused on expanding refining capacity and lowering fuel prices. Following the meeting, Trump posted on Truth Social, announcing environmental waivers for small refineries and urging companies to ramp up production. Goldman Sachs promptly raised its 2027 forecast for U.S. diesel refining margins from $27 to $63 per barrel; its forecast for European refiners rose from $19 to $49 per barrel. As Bloomberg reported, Goldman Sachs analysts wrote in their research note: “Ongoing damage to refineries in the Middle East and Russia has further squeezed already-tight global refining capacity, pushing refined product margins to successive record highs.” The U.S. diesel crack spread—the difference between diesel (and other refined product) prices and crude oil prices—surpassed $106 per barrel. Three simultaneous supply shocks make diesel the ‘epicenter of the crisis’ Soaring diesel prices stem from three concurrent disruptions along the supply chain. First, the Iran war has effectively sealed off the Strait of Hormuz. Since the initial U.S.-Israeli airstrikes against Iran in late February, refined product exports from the Persian Gulf have plummeted to about 40% of pre-war levels, while crude exports have dropped to only 70–80% of prior volumes. According to Bloomberg, the U.S. launched another large-scale air raid against Iran on September 1; Iran’s Islamic Revolutionary Guard Corps responded by warning of “severe retaliation.” Second, Russian refining capacity has clearly declined amid the ongoing Russia-Ukraine conflict. Third, Middle Eastern refineries have sustained damage. According to Goldman Sachs data, global refinery shutdowns currently exceed seasonal averages by 60%; the IEA estimates that Iranian attacks have taken nearly 3 million barrels per day of refining capacity offline. According to data from the American Petroleum Institute (API), overall global crude processing volumes have declined by approximately 5 million barrels per day compared to a year earlier. Diesel lies at the heart of this surge: since February, global refined product wholesale prices have risen by $40 per barrel on average, with diesel accounting for over 40% of that increase. U.S. refiners operating at full capacity—but nearing their limits Facing the supply shortfall, U.S. refiners are running at historically unprecedented intensity. According to data from the U.S. Energy Information Administration (EIA), for the week ending August 21, U.S. refinery utilization rates remained at or above 95% for 12 consecutive weeks—the longest such streak since 2000. Last week, utilization rose further to 97.4%. The American Petroleum Institute reports that U.S. diesel production in July reached a record high for that month.

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