Reuters: Trump's Ability to Lower Oil Prices Is Waning / Perhaps the Era of 'Trump-Based Deals' Has Come to an End

The Trump administration can no longer simply talk these realities away. It is now clear that increasing oil transit flows is one issue, but convincing traders that oil supply will remain secure and stable in the future is a far more difficult problem.

Reuters wrote: The ability of Donald Trump, the president of the United States, to lower the price of oil in the markets with a few sentences is decreasing at the same time as the Iran war is prolonged; A situation that makes the global energy markets more vulnerable to the escalation of conflicts.

According to the selection report, this article continues: The ability of the Republican President of the United States to lower prices through his statements and messages, which is called "Jawboning", was one of the key features of the early months of the Iran War; The war that began in late February.

In the months leading up to the short-lived ceasefire in July, Trump's public statements and repeated messages on social media that Washington and Tehran were close to an agreement to end the conflict and reopen the Strait of Hormuz helped keep oil prices low and away from historic highs.

It seemed that these statements were effective; Even in the situation that the blocking of this strategic bottleneck, through which about one-fifth of the world's oil supply passed before the war, had disturbed the energy markets.

During the months of US and Israeli airstrikes, Trump had repeatedly predicted that oil prices would "drop like a rock" once a ceasefire agreement was reached with Iran.

Traders may have overestimated the risk of betting against Trump's desire to avoid a jump in domestic fuel prices. With oil supplies dwindling, they assumed the US president would back down and quickly end the war.

That bet seemed to pay off until markets faced the limits of Trump's influence. The July ceasefire collapsed, giving way to a protracted, low-intensity conflict that has spread across the region; including the recent escalation of violence between Yemen's Ansarullah and Saudi Arabia.

Now, this distrust of the markets has weakened the efforts of the American president to curb the sharp increase in the price of diesel; An issue that has become one of Trump's main priorities as the US midterm elections approach on November 3rd, in just three weeks.

For energy markets, the era of Trump-driven trading may be over.

The price of Brent crude oil, the global oil market index, has stubbornly remained above $100 per barrel for most of the recent weeks; Despite the significant improvement in the flow of oil through the Strait of Hormuz.

However, repeated attempts by Trump and Energy Secretary Chris Wright to calm markets by highlighting improvements in oil shipments have not worked.

After the news of a significant increase in the flow of oil, the price of Brent fell below $100 per barrel for a while; But this reduction did not last long, as violence continued to spread in the Middle East and Iranian attacks on oil tankers intensified.

Meanwhile, transporting oil from this region is still very expensive; Because the cost of renting oil tankers and transportation insurance premiums have greatly increased, and it has become more difficult to get oil out of the region due to logistical complications.

The Trump administration can no longer gloss over these realities with mere words.

It is now clear that increasing the flow of oil is an issue, but convincing traders that the supply of oil will remain safe and stable in the future is a much more difficult issue.

No market reveals this fact as much as the diesel market.

The combination of the fallout from the Middle East war and Ukraine's campaign of drone strikes against Russian energy infrastructure has severely reduced global refining capacity and limited production of gasoline, diesel, and jet fuel.

The price of diesel in the United States reached new records and increased to $6.50 per gallon. Gasoline prices are still high and intensify the pressure caused by the increase in the cost of living; The pressure that has become a political challenge for Trump on the eve of the November 3 election.

Therefore, it is not surprising that the US government has spent most of its efforts in recent weeks to find ways to reduce the price of diesel.

Last week, Trump announced an agreement with Russian President Vladimir Putin under which Russia would resume some of its diesel exports to ease global shortages. Washington also reduced some sanctions to facilitate these shipments; An action that drew criticism from Republicans and Democrats.

On October 9, Trump claimed on the Truth Social social network: "Between our complete control of the Strait of Hormuz and this big news announcement about Russian energy, the price of diesel for Americans, and indeed for the entire world, will drop rapidly and by unprecedented numbers!"

But the volume of promised exports is not very significant. According to Trump's statements, the total oil exports promised by Russia in the next three months will be about 15 million barrels; A volume that is only equivalent to almost half of the world's diesel consumption in one day.

On Sunday, Trump also announced the cease-fire agreement in the field of energy infrastructure between Russia and Ukraine; However, neither side has yet publicly confirmed adherence to the agreement.

These actions take place after the US government took other steps to reduce domestic deficits; Including the pressure on Europe to accelerate the release of emergency diesel reserves and reduce restrictions on the use of some types of this fuel.

However, Trump's diesel diplomacy has had limited impact so far. U.S. wholesale diesel prices were unchanged on Monday, European diesel futures fell 2 percent, while Brent crude rose about 2 percent to near $107 a barrel.

The markets' limited reaction indicates a deeper problem. Since the start of the Iran war, about 2 million barrels per day of the refining capacity of Russia and the Middle East have been unavailable, and global oil reserves have also decreased drastically. This situation has put the energy markets in a fragile position that cannot be solved by political statements or by a relatively limited increase in supply.

A halt to Ukraine's attacks on Russian refineries could eventually allow Russia to resume exports in larger volumes. Russia is the second largest exporter of diesel in the world.

However, repairing damaged refineries and export infrastructure will take months or even years. Markets simply do not believe that Trump has the ability to resolve this situation.

The US president can still influence energy markets with his statements, but his power to do so has clearly diminished as the web of conflicts has grown more complex.

For investors, traders and energy producers, political statements and even practical actions alone are no longer enough. They need assurance that Washington has both the will and the ability to reach a lasting solution; A certainty that is now extremely rare.