Trump vs. big oil

SP500

Key zone: 7,400 - 7,500

Buy: 7,570 (on a decisive break above 7,550); target 7,700-7.750; StopLoss 7,520

Sell: 7,400 (on a pullback after retesting 7,500); target 7,250; StopLoss 7,450

The war surrounding Iran has turned into a domestic political problem for Trump. American consumers are facing the most painful consequence of the conflict—expensive gasoline. And now, the president's main target is no longer Tehran but America's largest oil corporations.

According to the American Automobile Association (AAA), the average gasoline price in the United States has risen by approximately 24% compared with a year ago, reaching $3.80 per gallon. Diesel prices have increased by nearly 30% to $4.80 per gallon. For the White House, this is no longer just another economic statistic but a factor capable of influencing the political mood of American voters.

Trump believes that a fair gasoline price should be around $2.25 per gallon. However, prices at that level were last seen only in 2020, when the COVID-19 pandemic virtually brought the global economy to a standstill and caused oil demand to collapse.

The president openly accuses oil companies of reducing prices too slowly and using the military conflict to generate excessive profits.

Reminder:

The oil industry firmly rejects these accusations. Companies emphasize that fuel prices are determined by far more than crude oil prices alone. The final retail price includes transportation, refining, logistics, mandatory environmental fuel standards, taxes, and commercial inventory levels.

In addition, a substantial portion of crude oil is purchased in advance at higher prices, meaning that lower crude prices are reflected at the pump only after several weeks—or even months.

• During geopolitical crises, gasoline prices traditionally rise faster than crude oil prices. As a result, the crack spread—the difference between refined product prices and crude oil costs—widens sharply.
• At the end of June, the U.S. gasoline crack spread exceeded $30 per barrel, compared with a range of $18–22 just one month earlier.
• Valero Energy, Marathon Petroleum, and Phillips 66 are expected to report their strongest financial results in several recent quarters. Meanwhile, integrated energy giants ExxonMobil and Chevron continue to benefit from both highly profitable upstream operations and record refining margins. According to analysts, refining division profits could increase by 30–60% in the second quarter.
• Expensive gasoline is becoming a direct driver of inflation. Transportation costs are rising, airline tickets are becoming more expensive, logistics costs are increasing, food prices are climbing, and virtually the entire consumer price chain is under pressure. For the Federal Reserve, this represents an additional risk of persistent inflation.
• According to Financial Times surveys, about 58% of Americans believe that the military campaign against Iran has not justified its economic costs. For Republicans, this is becoming a serious political challenge ahead of the next election cycle.

The military conflict has once again restored a significant geopolitical premium to the oil market. Even though shipping through the Strait of Hormuz is gradually recovering, refiners remain able to maintain elevated fuel prices as long as security risks persist.

What does this mean?

The confrontation between the White House and Big Oil demonstrates how profoundly the structure of the global oil market has changed. Today, prices are driven by much more than the traditional balance between supply and demand.

Pressure from the Trump administration could increase volatility in refining company stocks and temporarily weaken sentiment across the energy sector. Fundamentally, however, industry profitability continues to be supported by high refining margins and resilient demand for petroleum products.

Any new escalation involving Iran or the Strait of Hormuz could quickly push Brent crude back toward the $80–85 per barrel range. Conversely, if diplomatic agreements hold, downward pressure on oil prices is likely to increase gradually.

So we act wisely and avoid unnecessary risks.

Profits to y’all!