The Oil Price Dilemma: Trump Favors $40, Call Options Bet on $95

TradingKey - Following signs of a softening in Trump’s tariff policy, global economic growth prospects have improved, leading to a multi-day rebound in international oil prices. With Donald Trump expressing a continued preference for lower oil prices, the market now faces a dilemma: should it follow Trump’s rhetoric or economic fundamentals?

In addition to promoting manufacturing repatriation, strengthening the U.S. as an energy superpower remains a core policy goal for Trump’s second-term administration. Trump has repeatedly emphasized his desire to boost U.S. crude production, using it as a tool to bring down what he calls “Bidenflation.”

Recently, Goldman Sachs analysts noted that Trump has consistently monitored the oil market and America’s dominance in the sector. He has referenced the topic nearly 900 times across social media platforms.

Goldman pointed out that Trump appears most comfortable with WTI crude prices in the range of $40 to $50 per barrel — a level at which his tendency to post about oil prices significantly declines.

The bank noted that when WTI prices rise above $50 per barrel, Trump tends to call for a decrease. Conversely, when prices fall below $30, he has previously urged higher prices — typically to protect domestic oil producers.

Since April, Trump has repeatedly called publicly for people to "buy stocks," and U.S. equities have indeed surged following some of his tweets. Therefore, the president’s bearish stance on oil prices may also influence investor psychology.

However, on the flip side, around the time the U.S.-China trade deal was reached, the probability of economic recessions in the U.S. and globally were revised downward, giving oil prices a significant boost. As of May 14, WTI crude had risen 8.61% month-to-date, currently trading at $63.40 per barrel, while Brent crude gained 5.10%, trading at $66.33 per barrel.

Data shows that since mid-April, there has been a sharp increase in the number of Brent crude call options expiring in late July with a strike price of $95 per barrel.

Besides expectations of further tariff reductions, Mizuho Securities noted that bullish sentiment toward oil prices could also stem from expectations that OPEC will halt further production increases, or that negotiations between the U.S. and Iran might stall.