WASHINGTON — With international oil prices topping $110 a barrel, U.S. President Donald Trump said he would use the Defense Production Act to channel $150 million into expanding the country's refining capacity and lifting output of diesel and gasoline.
Trump made the remarks during a visit to Ohio on the 22nd, according to the White House press pool. Earlier, he signed a presidential memorandum invoking the DPA, a law enacted in 1950 during the Korean War, to expand domestic oil production and refining capacity.
The memorandum designates oil production, refining, transportation and storage facilities as industrial resources essential to national security. It also opens the way for the government to direct funds into oil production sites, refineries, pipelines and storage facilities, or to enter into purchase agreements.
The move is seen as a decision to reach for a law created during the Korean War to expand domestic crude output, after oil prices began climbing again just ahead of the Nov. 3 midterm elections. Brent crude futures jumped 4% to settle at $113.17 a barrel on the ICE Futures Europe exchange in London, while West Texas Intermediate rose 2.39% to end at $99.47 a barrel on the New York Mercantile Exchange. The gains followed claims by Houthi rebels that they had carried out a precision strike on Saudi Arabia's defense ministry headquarters, along with a New York Times report that the United States and Israel had drawn up plans for intense airstrikes on Iran after the midterm elections.
Oil prices showed no sign of settling despite Trump's action. As of 10 p.m. Eastern time on the 22nd, Brent futures had risen further to $114.25, while WTI broke past $100 to trade at $100.59.