Releasing strategic oil reserves domestically, the U.S. still has "6 major moves," but if the Strait of Hormuz is blocked, the "impact will be limited."

International oil prices surged sharply due to the US-Iran conflict. According to the latest reports on Wednesday, the IEA plans to propose releasing the largest strategic oil reserves in history, potentially exceeding the 182 million barrels released during the Russia-Ukraine conflict in 2022. G7 leaders will hold an emergency phone call.

However, JPMorgan Chase’s head of commodities research, Natasha Kaneva, bluntly stated in a recent report: Unless the security passage through the Strait of Hormuz is guaranteed, all policy tools will have limited impact on oil prices, because potential supply losses over the next two weeks could reach up to 12 million barrels per day (12 mbd).

JPMorgan notes that Trump is reviewing several measures to suppress oil prices, including restricting US exports, intervening in oil futures markets, waiving certain federal taxes, and suspending the Jones Act requirements. Trump previously stated that the US has a “much longer time frame than 4 to 5 weeks” and claimed that “the war could end soon,” further depressing oil prices.

But JPMorgan believes that short-term “verbal interventions” can suppress market sentiment, yet structural supply gaps far exceed what policy tools can cover. Whether the security passage through the Strait of Hormuz can be restored is the real key variable determining oil price trends. Until the situation clarifies, high volatility in energy markets will persist.

Major Move 1: Release of Strategic Petroleum Reserves (SPR) — A Drop in the Bucket

G7 governments are discussing jointly releasing 300 to 400 million barrels of strategic reserves under IEA coordination. JPMorgan estimates that participating countries could achieve a combined release rate of about 1.2 million barrels per day (1.2 mbd), but this is far from enough to fill potential gaps.

Key data:

• OECD total strategic reserves: 1.247 billion barrels, including 935 million barrels of crude oil and 312 million barrels of refined products.

• US SPR status: About 415 million barrels, roughly 58% of capacity, with physical limitations in salt cavern integrity and extraction rates, likely resulting in a release rate below the 2022 average of 1 million barrels per day.

• Legal minimum: Congress mandates a minimum SPR stock of 252.4 million barrels. The President can declare a “serious energy supply disruption” to override this limit (Biden invoked this authority in spring 2022 to authorize 180 million barrels sales); but practical operational bottom line is around 150-160 million barrels to maintain salt cavern stability.

• Implementation lag: After the presidential order, the Department of Energy needs about 13 days to award contracts and begin deliveries, plus additional transportation time to end-users.

Historically, the peak emergency release by OECD was about 1.4 million barrels per day. Even at a release rate of 1.2 million barrels daily, facing potential supply losses of 12 million barrels per day over two weeks, it’s merely a drop in the bucket.

Major Move 2: Restrict US Exports — Short-term Price Suppression, Long-term Backfire

Under a national emergency, Trump has the authority to restrict crude oil and refined product exports, using legal tools such as the International Emergency Economic Powers Act (IEEPA), the Energy Policy and Conservation Act, and the 2018 Export Control Reform Act.

Since the 2015 repeal of the crude oil export ban, the US has become one of the world’s largest suppliers, exporting about 4 million barrels of crude daily, along with large volumes of diesel, gasoline, and other refined products to Europe, Latin America, and Asia.

Short-term effect: Export restrictions would trap barrels within the US, lowering domestic oil prices.

Long-term risk: A sudden reduction in international supply would cause immediate shortages at overseas refineries, sharply raising global benchmark prices; simultaneously, lower prices would dampen US drilling activity, tightening global supply-demand balance and exerting upward pressure on both global and US oil prices.

Major Move 3: Waiving the Jones Act — Better When Paired with SPR

The Jones Act (1920 Merchant Marine Act) requires ships transporting cargo between US ports to be US-built, fly the US flag, and be crewed by Americans. Authorities can grant temporary waivers during national defense needs or emergencies, which have been invoked after major hurricanes, allowing foreign oil tankers to transport fuel between US ports.

Policy synergy: Combining SPR releases with temporary Jones Act waivers can enhance policy effectiveness. Without waivers, limited US-flagged tanker capacity would restrict the speed at which SPR barrels reach key refineries or supply shortfalls.

Major Move 4: Waiving Federal Fuel Taxes — Requires Congressional Legislation, Difficult to Implement

Federal gasoline tax is 18.4 cents per gallon; diesel tax is 24.4 cents per gallon, funding the Highway Trust Fund. Fully suspending federal fuel taxes would almost certainly require legislation passed by Congress and signed by the President. The executive branch can only provide limited administrative relief, such as deferring payments.

In contrast, state governments have greater flexibility. During the 2022 spike in fuel prices, many states temporarily suspended state fuel taxes, which range from about 15 cents to over 50 cents per gallon. Suspension can provide short-term relief to consumers but reduces revenue for transportation infrastructure and road maintenance.

Major Move 5: Relaxing E15 Gasoline Regulations — Limited Overall Impact

EPA can issue emergency exemptions under the Clean Air Act to allow nationwide sales of E15 gasoline (15% ethanol blend) during summer driving season, which is normally restricted due to air quality regulations. This can slightly expand gasoline supply pools and ease pump prices, but overall impact remains limited.

Major Move 6: Relaxing Reid Vapor Pressure (RVP) Standards — Slightly Better Than E15, Still Mild

RVP exemptions allow refiners to sell winter-grade gasoline longer into summer, directly increasing the legal volume of available fuel. EPA can temporarily relax RVP limits under the Clean Air Act, enabling refiners to quickly increase supply using existing inventories and simpler blending processes.

This measure is slightly more effective than E15 relaxations—typically easing regional shortages and lowering prices by a few cents per gallon—and because it directly increases sellable gasoline volume, it acts faster than other regulatory adjustments. Nonetheless, overall impact remains moderate.

The Real Key: When Will the Strait of Hormuz Reopen?

JPMorgan’s conclusion is clear: All the above policy measures will have limited impact on oil prices until security passage through the Strait of Hormuz is guaranteed.

Current situation:

• US Maritime Administration (MARAD) canceled last weekend its previous advisories urging commercial ships to avoid the Strait of Hormuz and Persian Gulf (originally valid until March 13), but this is only a necessary condition, not sufficient.

• US Navy and CENTCOM have not announced the Strait as open for safe passage, nor are there signs of mine-clearing or escort plans.

• Energy Secretary Jennifer Granholm declined to provide a specific timeline for reopening on Sunday, acknowledging that military escort operations have not yet begun.

• Carrier deployments: USS Abraham Lincoln (still conducting strikes against Iran in the Arabian Sea); USS Gerald R. Ford transiting the Red Sea; USS George H. W. Bush (third carrier) completed pre-deployment training last Thursday, and if ordered to deploy immediately, would take about 10-12 days to reach the broader Middle East region.

• France’s navy will also participate in the defense of the Strait, with the Charles de Gaulle carrier arriving in Cyprus on Monday. French President Macron stated that escort missions through the Strait will only be feasible after the most intense phase of the war subsides.

US strategic focus is currently on weakening Iran’s asymmetric capabilities to threaten commercial shipping. Once these disruptions are sufficiently suppressed, US naval escort and government-backed insurance will restore confidence in commercial oil tanker transit through the Strait of Hormuz. An official US Navy or CENTCOM statement on the Strait’s security and the actual start of escort operations would be the true trigger for a turning point in oil prices.

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