US energy chief says ‘fear premium’ in oil markets will ebb
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“The oil is there,” US Energy Secretary Chris Wright said on March 8. “You’re seeing a little bit of fear premium in the marketplace.”
PHOTO: REUTERS
NEW YORK – US Energy Secretary Chris Wright sought to counter market warnings about an extended Middle East war, saying global energy supplies are sufficient and the surge in oil prices reflects a “fear premium” that will not last.
Mr Wright joined US President Donald Trump in arguing that the US-Israeli war with Iran will only temporarily disrupt markets and ship traffic, saying the timeline “in the worst case” is a matter of weeks, rather than months.
“The oil is there,” Mr Wright said on March 8 on CNN’s State Of The Union. “You’re seeing a little bit of fear premium in the marketplace. But the world is not short of oil today or natural gas.”
With midterm elections ahead in November, Mr Trump is courting political risk with the attack on Iran – which has prompted Iranian retaliation on US allies in the Persian Gulf – virtually halted tanker traffic through the Hormuz strait and pushed up gasoline prices for Americans.
“What you are seeing is emotional reactions and fear that this is a long-term war,” Mr Wright said on CBS’s Face The Nation. “This is not a long-term war. This is a temporary movement.”
While Mr Wright cited a tanker that “went through the Gulf about 24 hours ago”, Hormuz transit remained near a standstill for a sixth day with only Iran-linked tankers making the crossing over the past 24 hours.
The Trump administration has announced a US$20 billion (S$26 billion) reinsurance programme and suggested Navy escorts in a bid to revive traffic, though Mr Wright suggested the US is focused on air strikes on Iran for now.
“We’re nowhere near normal traffic right now,” he said on CNN. “And you know that that’ll take some time. But again, worst case, that’s a few weeks, that’s not months.”
Mr Wright acknowledged the impact on US retail fuel prices, which have increased by almost 16 per cent in a week to US$3.45 for regular gasoline, according to the American Automobile Association’s national average.
“We want it back below US$3 a gallon, and it will be again before too long,” Mr Wright said.
He echoed Mr Trump in citing US reports of progress in destroying most of Iran’s missile and drone capability, though he said only Israel is attacking Iranian oil or gas infrastructure.
“There are no plans to target Iran’s oil industry, their natural gas industry, or anything about their energy industry,” he said. “And these are Israeli strikes. These are local fuel depots to fill up the gas tank, you know, in this neighbourhood in Tehran.
White House Press Secretary Karoline Leavitt argued that markets are facing “a short-term disruption”.
“We’re seeing a slight increase in oil and gas prices, but ultimately, taking out the rogue Iranian regime is going to be a good thing for the oil industry,” Ms Leavitt said on Fox News’ Sunday Morning Futures. BLOOMBERG
