Key Takeaways:
President Donald Trump accused major oil companies of price gouging and directed the Justice Department to investigate, as Brent crude fell to a four-month low near $76 a barrel.
President Donald Trump ordered the Justice Department to investigate major oil companies for price gouging Wednesday, accusing them of failing to pass on lower crude costs as Brent crude slid to $76.38 a barrel.
"The big Oil Companies are not dropping their price at the pump commensurate with the sharply lower prices they are paying for Oil," Trump wrote on Truth Social. "Customers are being 'gouged.'"
Gasoline prices have fallen for six straight weeks, with the national average dropping 14.1 cents to $3.85 a gallon, according to GasBuddy. That represents a 15% decline from the May peak. Brent crude for August delivery fell 0.9% to $76.38 a barrel, while West Texas Intermediate crude dropped 0.9% to $72.52 a barrel — both at the lowest since early March.
The investigation adds regulatory uncertainty for the largest U.S. oil producers at a time when easing geopolitical risks are already pressuring prices. The International Maritime Organization said it secured safe passage to evacuate more than 11,000 seafarers stranded in the Persian Gulf, signaling a gradual normalization of shipping through the Strait of Hormuz.
Karen Young, senior research scholar at Columbia University's Center on Global Energy Policy, described Trump's post as political theater, noting that retail gasoline prices involve complex transmission mechanisms. "This is not how U.S. gasoline prices actually work," she said. Pump prices are influenced by state and local taxes, with pricing power held by refiners rather than crude producers, and adjustments typically take weeks to flow through, she added.
The Strait of Hormuz has seen a partial recovery in traffic after tensions between the U.S. and Iran disrupted one of the world's most critical energy chokepoints. Two smaller crude tankers sailed through the waterway Monday, though transit volumes remain well below pre-conflict levels. IMO Secretary-General Arsenio Dominguez said the evacuation effort would proceed "in close cooperation with Iran, Oman, other regional coastal states, the United States and the shipping industry."
ING commodity analysts said in a note that "positive signals from the Persian Gulf are fueling optimism about oil flows through the Strait of Hormuz," while cautioning that crossings remain substantially below normal.
Supply risks linger as hurricane season approaches
The supply outlook remains fragile. TotalEnergies shut its 238,000 barrel-per-day Port Arthur refinery in Texas last week after a lightning strike knocked out power, with a full restart expected within seven days. A fire also broke out at Marathon Petroleum's 631,000-barrel-per-day Galveston Bay refinery in Texas City on Sunday. The approaching Atlantic hurricane season adds another layer of supply risk.
The political stakes are high for Trump and fellow Republicans heading into November's midterm elections, where they are defending narrow majorities in Congress. Gasoline prices remain a politically sensitive issue, and Trump has made lower energy costs a central pillar of his economic message. The DOJ has not specified what form any investigation might take, but a review could examine whether refiners, distributors or retailers are maintaining unusually high margins despite lower crude costs.
This article is for informational purposes only and does not constitute investment advice.
