American Petroleum's Mike Sommers Talks Hormuz Oil Flows

Summary

Bloomberg Talks: American Petroleum's Mike Sommers Talks Hormuz Oil Flows

Date: August 4, 2026
Host: Bloomberg (Energy Team)
Guest: Mike Sommers, President and CEO, American Petroleum Institute

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Episode Overview

This episode features a timely conversation with Mike Sommers, President and CEO of the American Petroleum Institute, focusing on the ongoing challenges and policies impacting the American oil industry—especially amid the effective closure of the Strait of Hormuz. The discussion touches on the U.S. administration’s energy policies, refinery bottlenecks, the possibility of export bans, the status of domestic infrastructure, and key market dynamics affecting prices at the pump.

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Key Discussion Points and Insights

1. Current U.S. Administration’s Relationship with the Oil Industry

• The conversation begins by acknowledging mixed signals around the President’s relationship with “Big Oil.”
• Mike Sommers:
  • Commends the President’s “energy dominance agenda” and increased domestic production, especially in federal waters and lands (01:23).
  • Emphasizes that the industry is a "price taker, not a price maker," and highlights that oil prices have risen due to the closure of the Strait of Hormuz, not industry manipulation (01:23–02:07).
  • Notes: "I give the President a lot of credit. His energy dominance agenda has really made the difference. We've opened up the Gulf of America again for production…" (01:23).

2. Industry Economics and Public Criticism

• Profitability and Pricing:
  • Sommers reiterates that the oil and gas sector experiences boom and bust cycles, often earning less on average than technology or finance sectors (02:12).
  • Recalls 2020’s negative oil prices as an example of the industry’s volatility.
  • Memorable quote: "This is a commodity business. Prices go up, prices go down. We have to deal with the price swings…" (02:12).
• Election-Year Rhetoric:
  • Sommers acknowledges heightened criticism during election cycles, naming major oil companies singled out by the President (03:47).

3. Policy Tools and Export Ban Risks

• Potential Export Ban:
  • The guest voices concern about the possibility of an export ban if gas prices stay above $4/gallon.
  • Explains the mismatch in crude quality (WTI vs. refining needs) and how export-import flows actually benefit consumers through discounts and flexibility in refining (04:21).
  • Warns: "Any kind of an export ban, I think would be a great concern to this industry." (05:21)
• Other Policy Levers:
  • Suggests that waivers (like the Jones Act) and tweaks to the renewable fuels standard could ease prices in the short term.

4. Refining Bottlenecks and Infrastructure Challenges

• Aging Refineries:
  • Sommers stresses the U.S. hasn't built a new refinery since 1976, and cites this as a key bottleneck in getting crude oil turned into consumer fuels—even when there’s sufficient crude supply (05:38).
  • "It's one of the reasons why we're so focused on getting legislative permitting reform done, because it is very hard to build anything in this country, particularly a new oil refinery." (05:38)
• Permitting Reform:
  • Argues that both major parties should unite on this issue, given its wide impact—benefiting oil, gas, and renewable infrastructure alike (06:27).
  • Expresses frustration that election-year politics have caused delays.

5. Global Oil Flows and Navigating the Strait of Hormuz Disruption

• Pipeline Capacity and Middle East Flows:
  • With tightened flows through Hormuz, new pipelines are partially compensating, but volumes are still lower than needed to stabilize prices (07:23).
  • Sommers highlights the need to maintain at least 11M barrels/day through the strait to normalize markets (07:23).
  • "We're getting only about 7 million barrels of oil through the Strait of Hormuz at this point. ... You only need to get that level up to about 11 million barrels a day..." (07:23).

6. Strategic Petroleum Reserve (SPR) and Price Relief

• SPR Release Question:
  • The administration is holding 39 million barrels earmarked for possible further release.
  • Sommers suggests such targeted releases can be an "important relief valve," but the decision depends on Middle East negotiations and market dynamics (08:12).
  • "I do think that that has provided an important relief valve for American consumers. Those targeted SPR releases, not just in the United States but throughout the world." (08:12)

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Notable Quotes & Memorable Moments

• On being a “price taker, not maker”:

  • Mike Sommers: "We are price takers, not price makers. ... Prices go up, prices go down. We have to deal with the price swings." (02:12)

• On the stakes of an export ban:

  • Mike Sommers: "Any kind of an export ban, I think would be a great concern to this industry." (05:21)

• On American refinery bottlenecks:

  • Mike Sommers: "We haven't built a refinery in this country since 1976... we should be building more refineries in this country because that's the real bottleneck right now." (05:38)

• On bipartisan permitting reform:

  • Mike Sommers: "Republicans and Democrats should be able to agree because all sides benefit, whether it's alternative energies like wind and solar or pipelines that would benefit oil and natural gas." (06:27)

• On Strait of Hormuz flows:

  • Mike Sommers: “We're getting only about 7 million barrels of oil through the Strait of Hormuz... you only need to get that level up to about 11 million barrels a day...” (07:23)

• On the value of the SPR:

  • Mike Sommers: “I do think that that has provided an important relief valve for American consumers.” (08:12)

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Timestamps for Important Segments

• [01:23] – Mike Sommers’ initial praise for the President’s energy agenda and market context
• [02:12] – On oil industry profit cycles and the role of market forces
• [03:38] – Discussion of election-year political rhetoric, naming of oil majors
• [04:21] – Risks and ramifications of a possible export ban
• [05:38] – The U.S. refining bottleneck and infrastructure challenge
• [06:27] – Legislative gridlock on permitting reform
• [07:23] – Market impact of reduced oil flows through the Strait of Hormuz
• [08:12] – Status and possible further drawdown from the U.S. Strategic Petroleum Reserve (SPR)

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Episode Takeaways

• The American oil industry sees itself as subject to volatile market forces, not in control of prices.
• Current high prices are being driven by global events—specifically the shutdown of the Strait of Hormuz—not by domestic manipulation.
• Infrastructure limitations, particularly in refineries and permitting backlogs, significantly constrain the U.S. energy system.
• Election-year politics complicate meaningful policy action such as permitting reform.
• Targeted SPR releases can provide relief, but sustainable solutions require stabilization in global oil flows.
• Banning exports would likely backfire, hurting both the industry and American consumers.

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This detailed summary captures the episode’s most engaging arguments, memorable moments, and insightful quotes, providing a clear understanding of the challenges and discussions shaping American and global oil markets in 2026.

Transcript

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[Bloomberg Energy Reporter]

It's kind of amazing since we hear so much about the President's relationship with the oil industry. While we may not be seeing a lot of additional drilling, there's a, it's kind of a vibes thing that there's just more positive energy in the energy space when it comes to this administration. But stopping down to call them out. What are we looking at for a gallon of gas today, Kaylee? $4 according to AAA and 8 cent. And we wanted to talk this out with Mike Summers. I'm guessing he was listening to this as well. Mike, of course runs the American Petroleum Institute where he's president and CEO, speaking for the industry. It's great to see you, Mike. Great to be here. Welcome back to Bloomberg. Is this an argument within the family? How would you describe the relationship between this administration and your industry and what's he looking for here?

[Mike Sommers]

Well, first of all, I give the President a lot of credit. His energy dominance agenda has really made the difference. We've opened up the Gulf of America again for production. We have more production on federal lands and of course in federal waters. Their regulatory agenda has been very positive. Oil and gas industry, there's no question this President has been focused on more production here in the United States and that has provided a buffer during this time when the Strait of Hormuz has been effectively closed. So I give him a lot of credit for his energy dominance agenda. At the same time, we know that this industry is a price taker, not a price maker. And because the straight in for moves has been shut down for basically five months, we're of course going to be dealing with higher prices at the pump.

[Bloomberg Interviewer]

So in other words, is higher profit not a choice or could they make a different choice?

[Mike Sommers]

Well, of course this is an industry. As I said, we are price takers, not price makers. And as a consequence of the Strait of Hormuz, which has been 20 million barrels of oil a day, not making it through the Strait, you're going to have to deal with higher prices. I'll remind you though, in 2020, I was actually in a meeting with the President in the Cabinet where this industry was actually Dealing with low prices, in fact, negative $32 prices. And that was a time when this industry was making virtually zero earnings. So this is a commodity business. Prices go up, prices go down. We have to deal with the price swings. And on average, this industry actually makes fewer earnings than other large industries like tech, like finance. So this is an industry that we do have to deal with those highs and lows. And high prices now mean investments for future production. One example of is during the 20082012 period when we were dealing with significant earnings. At that point too, that was allowed us to finance what eventually became the shale revolution, the fracking revolution, which allowed us today now produce about 14 million barrels of oil every.

[Bloomberg Energy Reporter]

Surely the President understands everything we're talking about here, right? I mean, he knows that there's a refining bottleneck in this country, that there's a disconnect. We talk about crack spreads between the price of crude and what we pay at the pump, that distinct distilled products are their own story. Is he just sounding the populist alarm in an election season? I feel your pain.

[Mike Sommers]

Well, I do think that everyone is concerned about high prices at the pump for American consumers and high electricity.

[Bloomberg Energy Reporter]

Of guys out by name though, ExxonMobil and Chevron.

[Mike Sommers]

Absolutely. But we understand that, you know, we're in an election year and we're going to have to deal with that kind of incoming. But at the same time, American consumers have to understand that during this time of high earnings, this is the time when we invest for future production going forward.

[Bloomberg Interviewer]

Well, as Joe's talking about the political considerations here, that arguably is why we've seen the President float things like a gas tax holiday, for example. Do you fear that he could even go so far if we see prices permanently above $4 a gallon, for example, to suggest that maybe there should be export bans put in place in this country? What would that do?

[Mike Sommers]

Well, we would also be very concerned about any kind of an export ban. I will say that there are a lot of policies that, that they put in place that have provided some kind of a buffer, for example, the Jones act waiver that they put into place. There are other things they could do. There are changes that they could make to the renewable fuels standard right now that are providing a higher price at the pump that we don't need to sustain right now, given the kind of challenges that we have. But we would be concerned about an export ban primarily because there is a mismatch between the kind of production that we have in the United States this WTI that we produce here in the United States isn't necessarily refined here in the United States. So we import a lot of product from overseas and then we export a lot of product from the United States to be refined elsewhere. That's actually to the benefit of American consumers because we buy that lower quality crude from other countries like Canada, and then sell it to American consumers at a discount. So any kind of an export ban, I think would be a great concern to this industry.

[Bloomberg Energy Reporter]

We've talked about the refining bottlenecks in this country and the need to maintain these refineries. At some point, you need to take them and fix the hardware. In a country that hasn't built a refinery, I believe, since the 1970s, is this the part that needs to be fixed?

[Mike Sommers]

Well, it's one of the reasons why we're so focused on getting legislative permitting reform done, because it is very hard to build anything in this country, particularly a new oil refinery. You're exactly right. We haven't built a refinery in this country since 1976. And if you think about the market that we were in in 1970, 1976, compared to the one that we are in today, it's a completely different story. We were importing oil at that point. Now we're exporting oil. It doesn't make any sense. We should be building more refineries in this country because that's the real bottleneck right now. Even when you're dealing with lower prices from a crude perspective, you don't have the refining capacity that you need to turn it into the products that we use on a daily basis, like gasoline and diesel.

[Bloomberg Interviewer]

What are you hearing about permitting reform on Capitol Hill right now? Or I guess maybe a better question is, are you hearing about it? Because we often don't.

[Mike Sommers]

This should be such a layup for the United States Congress right now. I believe it should be a political imperative for them. You see prices going up, particularly on the electricity side, because of more demand on the electrical grid because of data centers and the advent of artificial intelligence, unfortunately, lawmakers just aren't focused on it because we're dealing. We're in an election year. I think that this should have been the first thing on the agenda this Congress. Republicans and Democrats should be able to agree because all sides benefit, whether it's alternative energies like wind and solar or pipelines that would benefit oil and natural gas. But unfortunately, I think they're a little bit too focused on what's coming in November. And everybody wants to wait until they figure out who's going to win to Decide who's going to benefit from permitting reform.

[Bloomberg Energy Reporter]

There's great hope in the markets today. We see crude oil in the 70s for the first time in some time is encouraging. How long would we need to stay at these levels or move lower to see a significant change in gas prices?

[Mike Sommers]

Here's the bottom line. Unfortunately, we're still not getting enough product through the Strait of Hormuz. Even at the highest ends. They're saying that we're getting only about 7 million barrels of oil through the Strait of Hormuz at this point because of new pipeline capacity. You only need to get that level up to about 11 million barrels a day through the strait because of a lot of that product now flowing, flowing through pipelines. That is a great news story for the Middle east and I think over time we need to continue to build that infrastructure so that we can avoid the Strait over time. But right now we need to get that up to about 11 million barrels a day on a sustained basis. If we're going to get back to where we need to be back to where we were prior to this conflict beginning.

[Bloomberg Interviewer]

Well, so should this administration also tap the rest of the SPR drawdown that they said they would complete? I believe there's 39 million barrels left in that program.

[Mike Sommers]

So There are about 39 million barrels left in that program. We still have product in the Strategic Petroleum Reserve. That was something that they negotiated at the beginning of this that expires at the end of August. They need to think about where they are and start considering whether they're going to do another release or another exchange, which is how this program is developed. I don't know the answer to that yet. I don't think we're going to know until we know the results of of whether this potential deal in the Middle east comes through. We've seen this before, of course. I do think that that is more provided an important relief valve for American consumers. Those targeted SPR releases not just in the United States but throughout the world.

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