Is it feasible for the US Treasury Department to go off and manipulate the crude oil futures market, and for Benson to focus on macro hedging? Reuters reported that a senior White House official revealed that the US Treasury will announce a series of measures to address the rise in energy prices as soon as possible, which may include direct intervention in the oil futures market. In the morning, the Ministry of Finance announced that it would allow India to purchase Russian crude oil stockpiled on offshore oil tankers, which should be one of these measures. However, the most noteworthy aspect here is the possible direct intervention of the Ministry of Finance in the crude oil futures market. Although specific measures have not been announced yet, with this report, Brent crude oil futures still fell slightly. It is necessary to discuss the feasibility of this here. 1. Possible action measures Bessent previously served as the Chief Investment Officer of Soros Fund Management and later founded the macro hedge fund Key Square Group, with decades of experience in currency, bond, and commodity trading. If the Ministry of Finance really intervenes directly in the original futures trend, it can be considered that Beisente has really returned to its old business. In the past, the US Treasury Department's intervention in the market mainly occurred in the bond market and occasional exchange rate interventions. Interventions in the bond market are often subtle and not openly discussed. Like in the middle of last year, https://(x.com)/qinbafrank/status/19258712119296629? S=20 also discussed the bottoming out mechanism of Bersenth for US10Y. If the Ministry of Finance wants to intervene in the crude oil futures market path, it may be to "sell the near end of the futures curve and buy the far end" in order to lower the prices of recent contracts and calm market panic. 2. Is it allowed by law and mechanism? The US Treasury Department has historically mainly intervened in the foreign exchange market (such as USD/JPY, USD/CNY) through the Exchange Stabilization Fund (ESF), with legal authorization to operate financial markets under the guise of "exchange rate stability" or "international financial stability" Although crude oil futures are not a currency, they can be interpreted as related to "macroeconomic stability, inflation control, and energy security", especially in the current context of geopolitical conflicts. As mentioned earlier, Besant himself comes from a macro hedge fund background and is very familiar with commodity futures. So from a legal gray area and enforcement perspective, the Ministry of Finance can enter the WTI crude oil futures market of NYMEX/CME through ESF or other channels, directly buy and sell contracts, to suppress crude oil futures prices. As of the latest update, the size of the Exchange Stabilization Fund of the Ministry of Finance is 220 billion US dollars. 3. Past cases The US Treasury Department has indeed intervened in financial market price trends multiple times in history through the Exchange Stabilization Fund (ESF) or other mechanisms, but these interventions have mainly focused on the foreign exchange market and have indirect effects on the bond market. You can see the detailed cases of the Ministry of Finance's intervention in the foreign exchange and treasury bond markets when searching. In the past, the United States often suppressed oil prices through physical or political means, such as releasing the Strategic Petroleum Reserve (SPR), coordinating IEA storage, diplomatically pressuring OPEC to increase production, and implementing environmental/tax exemptions. However, there is almost no precedent for direct public intervention in commodity futures (such as crude oil futures) markets. 4. Can it be suppressed through financial means? Crude oil futures are one of the largest trading varieties in the world, with a huge daily trading volume (WTI+Brent futures have a daily average of several million lots) and extremely strong liquidity. Even if the Ministry of Finance uses billions or even billions of dollars, it may have an impact on short-term prices, but it will not reverse the supply and demand fundamentals and risk premium. In 2022, the Biden administration released two large-scale SPRs (totaling about 180 million barrels), which temporarily suppressed prices. However, a few months later, oil prices rose back because the physical supply did not fundamentally improve. In the medium to long term, it still depends on the supply situation. Once the market discovers that the government is "bottoming out" or "smashing the market", it is likely to trigger hedge funds to make reverse bets (betting that the government cannot hold on), with more speculative funds entering the game and market confidence even more chaotic. 5. So what is the most likely way and approach? From a personal perspective, it is most likely that Besent is currently using several combination punches to exert force together: 1) Announcing the Ministry of Finance's futures intervention and considering measures to prevent wind and deter speculative activities, and then taking into account market reactions before making specific responses; 2) Partially releasing the Strategic Petroleum Reserve (SPR), although the official statement states that there has been no discussion yet, may be relaxed once political pressure increases; 3) Coordinate with allies to release oil reserves together and bring down oil prices in the short term. Exchange time for space. OPEC has already announced a round of production increases this week, and the probability of further increases in the short term is unlikely. 4) Of course, the most crucial aspect is to ensure that the Strait of Hormuz is truly open for both escort and negotiation. This is the key to success. Ultimately, it still depends on whether the situation in the Middle East can be substantially eased and whether the Strait of Hormuz can resume normal passage. Of course, this also depends on whether the Ministry of Finance actually announces a specific plan later, and then we can judge the strength and possible effects by looking at the details of the plan.