Exchange Leaders Oppose US Intervention in Oil Futures

Leaders of major global exchanges are expressing strong opposition to potential intervention by the United States government in the oil futures market. The resistance comes as the U.S. Treasury weighs measures to stabilize energy prices following supply disruptions linked to the conflict involving Iran and Israel.

Terry Duffy, Chief Executive Officer of CME Group Inc., noted during a panel discussion that market participants generally react negatively to government interference in price discovery.

Markets do not like it when governments intervene on oil prices.

The CME, recognized as the world's largest derivatives exchange, is among several domestic platforms trading energy futures. While the White House and the Treasury Department have not officially commented on the reports, other industry leaders have echoed Duffy's concerns. One exchange executive, speaking anonymously, suggested that Treasury intervention could exacerbate the situation by increasing the risk of significant government losses if prices continue their upward trajectory.

John McKenzie, CEO of TMX Group Limited, also warned that such moves often result in unforeseen complications.

I usually I find those things lead to unintended consequences, as you create a different problem by trying to solve the first problem and the market will sort this out itself.

Oil prices climbed nearly 5% on Wednesday as fresh attacks on vessels in the Strait of Hormuz intensified supply fears. This surge occurred despite the U.S. government's announcement that it would release 172 million barrels from the strategic petroleum reserve. Analysts have pointed out that even the International Energy Agency's proposal for a 400 million barrel release might be insufficient to stabilize a market where prices have risen more than 25% since the outbreak of hostilities.