It wasn’t the type of news that will make many headlines. In fact, the major news networks have barely touched on it, which may actually be a good thing. Shortly after it was realized the Iranian drone attack on a Saudi oil refinery would cripple their production, the White House started getting the balls rolling to release our precious Strategic Petroleum Reserve. The President Tweeted as much today.
….sufficient to keep the markets well-supplied. I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.
— Donald J. Trump (@realDonaldTrump) September 15, 2019
Despite the media’s collective yawn, this is an extremely important move to prevent the economy from facing instability. Oil still drives most financial markets around the world. When the flow of oil is considered to be at risk, investors often panic. Today’s move is designed to prevent that panic.
Don’t get me wrong. This wasn’t a hard decision nor a breakthrough in policy. Any President would likely have done the same thing. But it’s important that the White House moved very quickly on this to stifle any Monday oil jitters on Wall Street. Waiting even an extra day, as some Presidents may have done while we wait for details surrounding the attack and Saudi Arabia’s ability to rebound, could have been catastrophic.
This demonstrates a proper understanding of how the markets work. Foreign affairs, particularly as they pertain to oil, can have swift and dramatic effects on the national and world economies. It’s normally best to be patient and wait for events to unfold before acting, but when it comes to oil, quick reassurances are necessary.
Between tariffs and instability in the Middle East, the economy is always on the verge of being a roller coaster ride. It’s important for the White House to be responsive and engaged. This move should alleviate market fears just in time for Monday.
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