Trump's Energy Crunch: Even Strategic Reserves May Not Tame $100 Crude

Monday’s oil market produced a session that will be studied in trading floors for years.

WTI futures – as closely tracked by the United States Oil Fund (NYSE:USO) – hit an overnight high of $119 per barrel before collapsing to an intraday low of $93 — a $26 range that ranks as the second-most volatile single session in the contract’s history, surpassed only by the negative-price collapse of April 2020.

The whipsaw was driven by mounting speculation that President Donald Trump would announce emergency energy measures as soon as today, with mounting speculation of a potential coordinated G7 strategic crude reserve release.

Yet some energy experts warn that even a coordinated release of oil reserves may struggle to contain crude prices as the Strait of Hormuz crisis threatens global supply.

Chart: Oil’s Wildest Day Since April 2020 As Trump Mulls Release Of Crude Reserves

Why The Release Of Strategic Reserves May Not Stop $100 Oil

Strategic petroleum reserves are designed to cushion short-term supply disruptions — not solve prolonged geopolitical crises.

According to the U.S. Energy Information Administration's Short-Term Energy Outlook, commercial crude and liquids inventories across the Organization for Economic Cooperation and Development total roughly 3 billion barrels.

Global oil demand currently runs near 100 million barrels per day. That means the combined reserves represent about 30 days of worldwide consumption.

According to Jeff Krimmel, owner of Krimmel Strategy Group, global inventories provide only limited protection.

“At 30 days of supply, they won’t make a meaningful dent in [oil] prices generally,” Krimmel told Benzinga in an exclusive interview on Monday.

Krimmel said the inventories were designed as short-term buffers rather than long-term protection against sustained supply disruptions.

“These inventories are mostly short-term demand coverage measures. They have not been built as, and the economics do not justify, long-term protection from ongoing supply disruptions,” he added.

Why Refined Fuel Prices May Keep Rising

Even if governments release crude reserves, consumers could continue to face rising costs at the pump, the expert warned.

Gasoline prices have already surged in response to the geopolitical shock. U.S. pump prices climbed more than $0.40 per gallon in the past week alone.

The increase in diesel prices has been even more dramatic, as highlighted here.

Krimmel added that refined fuel markets remain structurally tight, meaning crude releases alone may not reverse the price surge.

"Yes, refined fuel prices will continue to go higher even with crude reserve releases," he said. "The economics of crude reserves are sufficiently tight that they alone cannot drive oil prices down to the $60s where they were hovering before the war started."

Diesel prices could be especially problematic.

Unlike gasoline, diesel acts as a core input across logistics, manufacturing and agriculture. Higher diesel costs often ripple through supply chains and eventually raise consumer prices across the broader economy.

Inflation Risks Build

The energy shock is already feeding inflation expectations.

Prediction markets are pricing U.S. inflation above 2.8% on an annual basis by March, reflecting growing concerns that energy costs could reverse the recent disinflation trend.

Krimmel said diesel costs are particularly important for inflation because they affect freight and transportation activity across nearly every sector.

"Diesel prices carry more durably across the economy, given the extent to which broad-based freight and transportation activity is implicated," he said.

That dynamic could create a political challenge for the White House.

With midterm elections approaching, rising gasoline and diesel prices threaten to squeeze consumers and raise inflation just as policymakers attempt to stabilize energy markets.

For now, the oil market remains on edge. Traders continue to watch developments around the Strait of Hormuz, a critical chokepoint through which roughly one-fifth of global oil supply normally flows.

Even a large strategic reserve release may buy time. It may not buy economic stability.

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