Key Takeaways
The Trump administration continues to search for ways to curb steep oil and gasoline price increases since the outbreak of the conflict in Iran.
Iran’s effective blockade of the Strait of Hormuz has severely limited access to 20% of global oil supplies and other important commodities.
The Trump administration has granted temporary waivers on the Jones Act, on sanctioned Russian oil at sea, and on sanctioned Iranian oil at sea.
The administration has decided against limiting oil exports, but continues to pursue supply-side answers such as permitting relief.
LNG prices have jumped sharply in Asia and Europe after attacks in production areas in both Iran and Qatar, with damage requiring repairs.
The Trump administration has been searching for ways to reverse the steep rise in oil and gasoline prices that has resulted from the recent Iranian attacks on oil and gas fields in the region and the blockage of the Strait of Hormuz, a key waterway for oil tankers in the Middle East. Recently, President Trump placed a 60-day waiver on the Jones Act, a 100-year-old law that requires U.S. goods to move between U.S. ports on U.S. ships manned by U.S. crews. That waiver allows cheaper foreign ships, which outnumber U.S. ships by 7,500 to 55, to be used. The waiver would allow more efficient distribution of products within the United States, where pipelines do not exist.
The Trump administration has ruled out a ban on oil exports, a decision it announced at a meeting with oil executives to gather their input and ideas on stabilizing energy prices. According to Politico, officials at the meeting instead discussed permitting reforms and other measures, signaling a focus on supply-side solutions. Discussions regarding permitting reform, a priority for both the administration and energy producers, are underway in Congress, with growing optimism that a deal satisfactory to both parties can be reached.
To bring down prices, the Trump administration waived sanctions on the purchase of Iranian oil at sea for 30 days. Treasury Secretary Scott Bessent said the United States was weighing another release from the strategic oil reserve and the suspension of some sanctions on Iranian oil. “Unsanctioning” the Iranian oil already at sea would amount to about 140 million barrels and could reach Asian refiners in days. The Trump administration has removed sanctions from Russian oil and petroleum products that are currently stranded on ships at sea for 30 days, totaling 100 million barrels, almost a day’s worth of global consumption. It also granted India a 30-day waiver to purchase oil from Russia.
U.S. average retail prices for gasoline jumped to $3.96 a gallon on March 23, up from $2.93 a month ago. Diesel’s price surged more rapidly and is averaging $5.29 a gallon, up from $3.69 a month ago, which is hampering markets that move commodities nationwide. Higher fuel costs force households to spend more on energy, and less elsewhere, and more workers will likely change commute patterns or work from home, if it is an available option.
Jet fuel is now also more expensive, with a doubling in price since the Iran conflict began. Jet fuel is often the first refined oil product to run short. Airlines have canceled thousands of flights due to higher jet fuel prices and airspace restrictions from the war. The biggest hassle has been in Asia, where countries rely on Middle Eastern oil and have limited fuel stockpiles.
Other Trump Administration Measures to Reduce Prices
The United States is releasing 172 million barrels of oil from the Strategic Petroleum Reserve over a four-month period, and members of the International Energy Agency are agreeing to jointly release 400 million barrels from their strategic reserves, the largest such release in the agency’s history. Other measures offered by President Trump include ordering the U.S. International Development Finance Corporation to provide political risk insurance and financial guarantees for maritime trade in the Gulf to the tune of $20 billion, and providing U.S. Navy escort ships through the Strait of Hormuz, the waterway through which 20% of the world’s oil exports flow, once it is safe to do so. The U.S. Navy, however, is not yet available to escort ships, and since Iran is suspected to have laid a number of mines in the strait, the waterway must be swept before ships can safely transit. Fortunately, Israel now says it will help with opening the strait. To lower energy prices, the Strait of Hormuz must be opened because there are no other options to gain 20% of the world’s oil consumption.
LNG Supplies Will be Affected for Awhile
Even if the strait is reopened, the damage Iran inflicted on Qatar’s Ras Laffan liquefied natural gas (LNG) facility will hurt global LNG supply. According to Saad al-Kaabi, C.E.O. of state-owned LNG QatarEnergy, 17% of production capacity has been wiped out and it would take up to five years to restore. The attack disabled 14.1 million short tons per year of Qatar’s export capacity, tightening global markets and pushing prices higher as importers compete for limited cargoes.
Analysts say prolonged disruption could worsen supply shortages, force demand cuts in price-sensitive economies, and keep prices elevated for an extended period. Asia is the most exposed region, accounting for about 90% of Qatari LNG cargoes in 2025. In Europe, lower LNG availability is expected to reduce storage injections and accelerate fuel switching, particularly from gas to coal.
Analysis
The Trump administration is looking for ways to stabilize energy prices, waiving the Jones Act for 60 days and releasing 172 million barrels for the Strategic Petroleum Reserve. Wisely, the administration has promised not to ban oil exports, which would raise the international price of oil and, in turn, increase prices for consumers. As we’ve written previously, “The oil used for domestically produced gasoline differs from the oil we export, which goes to refineries overseas in countries such as the Netherlands, India, and Japan, thereby increasing the supply of oil worldwide and depressing prices… An oil export ban, even if temporary, would be going backwards.”
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