The memo does little to change the near-term oil balance, which is still driven by the Iran conflict.
Brent closed around $113 on Thursday, its highest since early May, after reports that the US and Israel have drawn up plans for renewed strikes on Iran after the midterms
That geopolitical risk premium outweighs any supply response the Defense Production Act can deliver in the coming weeks. The measure is more relevant for refining margins and US refiners: federal financial support for capacity could, over time, ease tight diesel and gasoline cracks that have pushed pump prices above what crude alone implies. Traders are also 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. — With fuel costs at record seasonal highs and the midterms less than two weeks away, the White House is again using a Korean War-era law to boost oil supply, though any relief at the pump will take longer than the campaign.
Summary: President Trump signed a memo determining that domestic petroleum production, refining and related activities are essential to national defense. The memo invokes Section 303 of the Defense Production Act, which allows federal financial support, purchases and purchase commitments to expand capacity. It builds on an April determination covering petroleum and recent steps, including a Defense Production Act-backed expansion of a Delek refinery in Texas.