Trump Expands Support for U.S. Oil Capacity as Brent Seen at $105
Key Facts
U.S. President Donald Trump issued a memorandum on October 22, 2026, to expand domestic oil capacity under the Defense Production Act, citing the need to avert a shortfall that would impair defense capabilities. He addressed the memorandum to the secretary of war, directing him to implement the decision and provide the necessary tools, according to the text published by the White House. The decision covers oil exploration, production and refining, as well as gathering and transportation pipelines. Its scope extends to storage and marine terminals, covering oil-related supply and logistics facilities. Trump exempted the expansion of the covered capacity from specific requirements under the law, citing the emergency and the protection of defense needs.
The memorandum allows the use of purchases, purchase commitments and financial support to develop the required production capacity. It describes these tools as practical and rapid means of meeting defense needs, according to the White House. In outlining obstacles to providing that capacity quickly enough, the memorandum identifies "financing constraints and long lead times." It also lists permitting and infrastructure bottlenecks among the reasons those needs have not been met. It further points to supply-chain limitations, in an assessment spanning project financing, implementation procedures and the facilities and supplies on which they depend.
Trump previously issued a similar decision on oil production, refining and logistics on April 20, 2026. The memorandum for that decision was addressed to the secretary of energy, according to the White House. As part of discussions on ways to expand refining capacity, Reuters quoted refining company officials as saying they had told the administration that federal funding would be more effective in improving refinery efficiency. Their recommendations included expanding existing facilities. They said building a new refinery would be "far more expensive and take years to complete," compared with directing funding toward upgrading existing facilities.
The decision comes against a backdrop of rising crude prices and tight diesel markets, according to estimates from the U.S. Energy Information Administration. The Brent spot price averaged $114 a barrel in September, up $23 from August. The agency expects Brent to average $105 a barrel in the fourth quarter of 2026, up $14 from its forecast the previous month. It attributes some of the upward pressure on crude to "extreme tightness in diesel markets." It said this increases refiners' need for crude to meet demand. On the U.S. East Coast, distillate fuel inventories in September fell to a level 32% below their five-year seasonal average, according to the agency.
The Weekly Petroleum Status Report, published by the Energy Information Administration on October 21, 2026, showed declines in crude and gasoline inventories and an increase in distillates during the week ended October 16. Commercial crude inventories, excluding the Strategic Petroleum Reserve, fell to 412.5 million barrels. Inventories stood at 415.6 million barrels the previous week, putting the weekly decline at 3.1 million barrels. Gasoline inventories fell to 205.3 million barrels from 208.3 million barrels. The weekly gasoline draw totaled 3.0 million barrels. Distillate inventories, meanwhile, rose to 104.3 million barrels from 102.6 million barrels, an increase of 1.7 million barrels.
On production, Energy Information Administration data showed U.S. crude output falling to 13,269 thousand barrels a day during the same week. That compared with production of 13,679 thousand barrels a day the previous week. The weekly decline totaled 410 thousand barrels a day. In a move concerning heating fuel supplies, the U.S. Department of Energy announced a solicitation for bids to borrow up to 315,000 barrels of ultra-low-sulfur distillates. The volumes offered for exchange come from the Northeast Home Heating Oil Reserve, according to the department's announcement.
The Department of Energy set Tuesday, October 27, 2026, as the deadline for submitting heating fuel exchange bids. Meanwhile, the Federal Reserve's Federal Open Market Committee holds its next meeting on October 27 and 28, according to the central bank's schedule. The Energy Information Administration usually publishes its Weekly Petroleum Status Report on Wednesday. The report is released at 10:30 a.m. U.S. Eastern Time, with exceptions tied to the holiday schedule. Transfers or deliveries of the heating fuel shipments offered for exchange are scheduled to be completed by November 13, 2026, according to the Department of Energy.