Oil price spike: Trump admin may ease US shipping rules
“In the interest of national defense, the White House is considering a limited-time waiver of the Jones Act to ensure the free flow of vital energy products and agricultural needs into U.S. ports,” White House Press Secretary Karoline Leavitt said in a statement. he said. “This action has not been concluded yet”
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The announcement could come as early as Thursday and would be aimed at combating rising fuel prices since the start of the US-Israeli war against Iran, sources told Reuters.
Under the Jones Act, goods shipped between U.S. ports must be transported on U.S.-built, U.S.-flagged and mostly U.S.-owned ships. This requirement sharply limits the number of tankers available for domestic shipments.
A temporary waiver of the rule would allow foreign ships to transport fuel between U.S. ports, potentially lowering shipping costs and speeding deliveries.
Also Read: Trump says US benefits from high oil prices but stops Iran ‘evil empire’ priority
The United States has granted Jones Act waivers only sparingly in the past, often in response to major supply disruptions. The most recent exemptions came in the wake of hurricanes such as Hurricane Harvey and Hurricane Maria in 2017. At the time, the U.S. Department of Homeland Security temporarily allowed foreign-flagged ships to carry fuel between U.S. ports to alleviate shortages and speed delivery to affected areas.
Oil prices rose nearly 9% on Thursday as Iran stepped up attacks on oil and transportation facilities in the Middle East and the country’s religious leader said the closure of the vital Strait of Hormuz should continue.
Brent futures added $8.05, or 8.8%, to $100.03 by 10:25 a.m. ET, or 1425 GMT, while U.S. West Texas Intermediate crude rose $8, or 9.2%, to $95.25 a barrel. Prices for both contracts were trending higher after U.S. Energy Secretary Chris Wright told CNBC that while the Navy cannot currently escort ships through the Strait of Hormuz, it is “quite likely” that could happen by the end of the month. However, global oil prices are unlikely to hit $200 a barrel, he said, even Iran if continued to strike merchant ships.
Great oil war in the Middle East
The war in the Middle East has caused the biggest oil supply disruption in the history of global markets, the International Energy Agency said on Thursday, a day after approving the release of a record 400 million barrels of oil from strategic stockpiles.
In its latest monthly oil market report, the organization stated that the Middle East and Gulf countries reduced their total oil production by at least 10 million barrels per day, which is equal to almost 10% of world demand.
A detailed breakdown has not yet been provided, so there is some doubt in the market that the full volume will actually be released, Energy Aspect analysts said, adding that stocks of mostly crude oil and some products totaling 400 million barrels are equivalent to only 25 days of the current disruption in flows.
The Strait of Hormuz passes off the coast of Iran and provides one-fifth of the world’s oil and liquefied natural gas.
