Trump Invokes Defense Act for Oil as Brent Hits $113

US President Donald Trump signed a memo on 22 October 2026 invoking Section 303 of the Defense Production Act for domestic oil, determining that petroleum production, refining and related activities are essential to national defense. Brent crude closed around $113 on Thursday, its highest since early May, after reports that US and Israeli planners have prepared for renewed strikes on Iran after the midterms. US gasoline has topped $4 a gallon in October for the first time on record, and diesel has held above $6.

Context — Why Trump Used the Defense Production Act Now

The timing is political as much as industrial. The November 3 midterm elections will decide control of Congress, and fuel costs have become a central campaign issue. Gasoline averaged around $3 a gallon when Trump returned to office promising to lower the cost of living, and it has since crossed $4.

This is not a first use of the law. A similar determination in April covered domestic petroleum production, refining and logistics, waived some procedural requirements and directed the Department of Energy to use financial tools to expand capacity. The administration has leaned on the Korean War-era statute more heavily in recent weeks.

Vice President JD Vance announced at a campaign stop in Texas last week that the Defense Production Act would be used to expand a Delek refinery in Tyler. Neither the White House nor the company detailed the funding or the added capacity.

Energy Secretary Chris Wright has said the administration is looking to reopen as many refineries as possible. Trump has also planned to direct department heads to find ways to control diesel prices before the vote, including by using the law and bypassing state and local rules that restrict energy production.

What changed the calculus is the gap between what crude alone implies and what consumers pay. The US Energy Information Administration put September's average retail prices at about $4.35 for gasoline and about $6.30 for diesel, citing higher crude costs and wider refining margins.

Data — What the Numbers Show

Section 303 lets the federal government support industrial capacity it deems vital to national defense through purchases, purchase commitments and other financial support. Full details of Thursday's memo were not immediately available, so the size of any federal commitment remains undisclosed.

The price data is unambiguous. Brent jumped around 4% on Thursday to settle near $113 a barrel, the highest level since early May. Average US gasoline prices have exceeded $4 a gallon in October for the first time on record, and diesel has traded above $6.

The consumer-level pressure extends beyond the pump. Heating oil prices in September's consumer price data were up more than 70% from a year earlier, just as households prepare for winter.

The EIA's September averages frame the scale: about $4.35 for gasoline and about $6.30 for diesel. The spread between those two products and the crude that feeds them is where refining margins live, and it is the reason the administration is targeting capacity rather than drilling alone.

Metric	Level
Brent crude (Thursday close)	~$113
US gasoline average (October)	Above $4/gal
US diesel average	Above $6/gal
EIA September gasoline retail	~$4.35/gal
EIA September diesel retail	~$6.30/gal
Heating oil, September CPI	+70% y/y

For comparison, gasoline averaged around $3 a gallon when Trump took office. That move from roughly $3 to above $4 is the political variable the memo is trying to address.

Analysis — What It Means for Refiners and Product Markets

The memo does little to change the near-term oil balance, which is still driven by the Iran conflict. The geopolitical risk premium outweighs any supply response the Defense Production Act can deliver in the coming weeks.

Where the measure matters is refining margins and US refiners. Federal financial support for capacity could, over time, ease the tight diesel and gasoline cracks that have pushed pump prices above what crude alone implies. That makes the policy a slow-acting lever on the product side rather than a crude-side one.

The constraint is physical. Expanding or restarting refineries takes months or longer, so the measures address long-term capacity rather than the price voters will see on election day. The Delek Tyler expansion announced by Vance illustrates the point: the announcement came without disclosed funding or added capacity.

The counter-argument is that capacity support can cut both ways. Refiners benefit from wide cracks today; a policy that narrows those cracks over time works against the margin that currently flatters their earnings. The same tool that helps consumers can compress the spread producers are capturing.

Positioning reflects that tension. Traders are likely to watch for further pre-election steps aimed at fuel costs, which could add headline volatility to US product futures even if their physical impact is limited. Crude traders, meanwhile, are anchored to Iran headlines rather than to industrial policy.

Outlook — What to Watch Next

The next catalyst is the November 3 midterm vote itself, which will decide control of Congress and shape how far the administration can push energy measures.

On the geopolitical side, the operative question is whether the planned renewed strikes on Iran proceed after the midterms. Trump told reporters the US is not negotiating with Iran and that something would happen fairly soon.

On the data side, the EIA expects retail gasoline prices to stay broadly steady in October before easing slowly in line with crude. That path depends heavily on how the conflict with Iran develops over the coming weeks, not on the Defense Production Act.

Watch Brent around the $113 level it settled near on Thursday, its highest since early May. A sustained move through that zone would keep the geopolitical premium intact and reinforce the pump-price problem the memo is meant to address.

Frequently Asked Questions

What does the Defense Production Act mean for oil prices right now?

Very little in the near term. Section 303 authorises federal financial support, purchases and purchase commitments to expand industrial capacity, but building or restarting refineries takes months or longer. The current oil balance is driven by the Iran conflict and the risk premium it puts on crude, not by federal capacity policy. Brent settled near $113 on Thursday, its highest since early May.

Why are US gasoline and diesel prices so high if crude is the main driver?

Crude is the main driver, but refining margins are doing part of the work. The EIA attributed September's roughly $4.35 gasoline and roughly $6.30 diesel averages to higher crude costs and wider refining margins. That is why the administration is targeting refining capacity rather than only production. Heating oil prices in September's CPI were up more than 70% from a year earlier.

Did the White House disclose how much funding the memo provides?

No. Full details of Thursday's memo were not immediately available. The earlier April determination waived some procedural requirements and directed the Department of Energy to use financial tools to expand capacity, but specific dollar figures were not released. The Delek refinery expansion in Tyler announced by Vice President JD Vance also came without disclosed funding or added capacity.

Bottom Line

The Defense Production Act cannot lower pump prices before the November 3 vote; the Iran risk premium can raise them.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.