Following the escalation of Middle East conflicts last week, which pushed the international crude benchmark Brent futures above $100 a barrel, U.S. energy policy has entered "contingency mode." Energy Secretary Wright, while emphasizing the government's tools to counter oil price shocks, also sought to downplay their potential impact.

On Monday, October 23rd, U.S. Energy Secretary Wright stated that a release from the Strategic Petroleum Reserve (SPR) is possible, though he considers the probability very low. Speaking at the CERAWeek energy conference in Houston, Wright noted that despite the recent surge, oil prices have not yet reached a level that triggers "demand destruction." The U.S. administration is utilizing SPR releases to mitigate market shocks while urging the industry to accelerate production increases.

Wright revealed that the U.S. has initiated a release of 1 to 1.5 million barrels per day from the SPR, with the potential to scale this up to 3 million barrels per day if necessary, aiming to stabilize global supply chains, particularly for Asian refineries hit hardest by the disruptions.

Multiple media outlets pointed out that against the backdrop of U.S.-Israel tensions with Iran disrupting shipping through the Strait of Hormuz and pressuring global energy supplies, the U.S. is tapping its strategic reserves to "suppress prices and stabilize market expectations." However, oil prices are still expected to face volatility in the near term.

During early trading on Monday, reports indicated that President Trump told media that the U.S. and Iran had "very good and productive" talks over the past two days, and the U.S. would "delay for five days" planned strikes on Iranian power stations. Following this news, Brent crude, which had been above $110, quickly fell below $100 and failed to reclaim that level subsequently.

**Prices Not at 'Demand Destruction' Levels; Policy Focus Remains on Supply Stability** Secretary Wright clearly stated that although Brent recently surpassed $100 per barrel, it has not risen high enough to significantly curb consumer demand, and "demand destruction" has not yet occurred. This assessment conveys two key signals:

* **Policy Tolerance Remains:** The U.S. government views current price levels as high but still within the economy's capacity to absorb. * **Intervention Leans Supply-Side:** The preference is to calm prices by increasing supply rather than suppressing demand.

In terms of market impact, this suggests a lack of strong near-term signals for aggressive "policy suppression" of prices, meaning the price center may maintain high volatility rather than a rapid decline.

**Strategic Petroleum Reserve as Core Tool, But Release Pace is Controlled** Wright emphasized that the U.S. has begun utilizing the SPR and possesses the capability to further expand the release volume. The initial release is about 1–1.5 million barrels per day, with a potential upper limit mentioned of up to 3 million barrels per day. Previously, the U.S. had provided approximately 45.2 million barrels of reserve crude to several energy companies as part of the first tranche of releases.

However, the policy tone is also cautious. Multiple media sources cited Wright's remarks indicating that the U.S. government is unlikely to undertake sustained, large-scale additional releases. The SPR is seen more as a "short-term buffer tool" than a long-term price suppression mechanism. This implies that SPR releases may alleviate supply tightness and bearish on prices in the short term, but medium to long-term price support remains intact due to limited government reserves unable to permanently replace supply.

**Calls for Oil and Gas Industry to Boost Production, Reinforcing 'Energy Dominance' Logic** Beyond utilizing reserves, Wright's core policy direction remains expanding supply. In meetings with energy industry executives, he urged the sector to:

* Increase domestic U.S. oil and gas production. * Accelerate the restoration and expansion of global supply capacity. * Utilize the current high-price window to boost investment and output.

This stance continues the Trump administration's "energy dominance" strategy, which aims to enhance U.S. fossil fuel production, reduce reliance on external suppliers, and thereby gain greater pricing power in the global energy market. For the market, this signal typically suggests improved medium to long-term supply expectations, bearish for crude, but short-term realization is difficult, providing ongoing support for high prices.

**Hormuz Impact Characterized as 'Temporary,' Policy Aims to Avoid Overreaction** Addressing a key market concern—disruptions in the Strait of Hormuz—Wright described the related impacts as "temporary." This assessment carries two implications:

* At the policy level, it aims to prevent panic from spreading and avoid further irrational price surges. * It provides justification for limited use of reserves, suggesting there's no need to enter an "extreme emergency state."

However, in practical terms, approximately 20% of global oil and gas transit relies on this route. A prolonged blockade would have profound supply impacts. Consequently, the market exhibits a typical divergence:

* **Policy Expectation:** Impact is manageable → suppresses further price spikes. * **Geopolitical Risk:** Uncertainty is high → provides risk premium support.

**Gasoline Prices Expected to Remain High, Political Pressure Mounts** Wright also warned on Monday that U.S. consumers might face high fuel prices for "several more weeks," posing a potential risk for the upcoming midterm elections. Domestic U.S. fuel prices have risen significantly, making energy a political focal point once again. This also explains the logic behind the policy mix:

* **Short-term:** Release SPR, stabilize markets. * **Medium-term:** Push for production increases, repair supply. * **Political level:** Avoid oil prices spiraling out of control and impacting the election.

**Global Coordinated Releases and Supply Restructuring Underway** It is noteworthy that the U.S. is not acting alone. The previous Friday, the International Energy Agency (IEA) announced that its 32 member countries agreed to collectively release a total of 400 million barrels from strategic reserves. This marks the largest coordinated release in IEA history. On the same day, the U.S. Department of Energy confirmed that, as part of this global IEA action, the U.S. plans to release 172 million barrels from the SPR in response to price increases triggered by U.S. and Israeli airstrikes on Iran. Besides releases from other IEA members, the U.S. is also exploring alternative supply sources, such as Venezuela. This indicates the global energy system is entering a "rebalancing phase": traditional Middle Eastern supply is disrupted; Western Hemisphere production and inventory systems temporarily take on a larger role; and energy trade flows undergo structural adjustments.