As the U.S. military actions in Iran trigger a surge in oil prices, the policy toolbox is nearly exhausted. Experts warn that if the Strait of Hormuz cannot be quickly reopened, all other measures taken by Washington will be merely a drop in the bucket.
This week, the Trump administration announced measures to provide insurance and escort for transit oil tankers, temporarily relaxed sanctions on Russian oil, and discussed options to boost Venezuelan oil production. However, most experts point to the same conclusion: only by quickly restoring the navigability of the Strait of Hormuz can the trend of oil prices be fundamentally reversed.
Brent crude oil closed this week at $93 per barrel, with a weekly increase of 28%, setting a new high for 2023; the U.S. benchmark West Texas Intermediate crude surged 36% to $91 per barrel, marking the largest weekly increase since 1983.
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According to a previous article published by Wall Street Insight, Goldman Sachs warned that if no signs of resolution appear before this weekend, oil prices will break the $100 per barrel mark next week; if the blockage of the Strait continues throughout March, prices could exceed the historical peaks of 2008 and 2022 ($147).
<h2>The Strait is the core; other options have limited marginal impact</h2>
Mike Sommers, CEO of the American Petroleum Institute, stated bluntly, &#34;The real focus must be on opening the Strait of Hormuz, because no other means, even if used in combination, can provide the kind of stability the world economy needs.&#34; He added that other options &#34;only have a marginal impact on prices.&#34;
The Strait of Hormuz is a vital passage for about one-fifth of the world's oil supply. Currently, traffic through the Strait has plummeted, with fewer than 50 vessels passing through in the past week, while about 500 oil and gas tankers are stranded in the surrounding waters. Shipowners have indicated that they will not risk sending vessels through the Strait without security guarantees.
<h2>Escorting, relaxing sanctions, and increasing production: multiple approaches still struggle to address urgent needs</h2>
The Trump administration has rolled out several emergency measures this week. In terms of insurance, a financial company announced a $20 billion reinsurance plan for transit oil tankers; however, insurance industry experts have questioned whether this agency can provide effective coverage sufficient to rebuild shipowners' confidence.
On the supply side, the U.S. Treasury temporarily relaxed sanctions on Russian oil exports to India on Thursday and hinted at possibly expanding the exemption scope. Treasury Secretary Mnuchin stated, &#34;We may lift sanctions on more Russian oil; a large amount of sanctioned oil is floating at sea, essentially, by lifting sanctions, the Treasury can create supply.&#34;
Additionally, officials mentioned the possibility of increasing Venezuelan oil production. After the Maduro regime was overthrown in January, the U.S. has taken over local production operations. However, the market remains skeptical about whether these measures can timely create effective supply
<h2>Strategic Petroleum Reserve in Crisis, Policy Buffer Space Significantly Narrowed</h2>
Washington's ability to respond to this crisis is severely constrained by the significant depletion of the Strategic Petroleum Reserve (SPR). In 2022, then-President Biden massively tapped into the reserves to mitigate the rise in oil prices caused by the Russia-Ukraine conflict, leading to a substantial decrease in inventory. Trump had promised to replenish the reserves after taking office, but failed to do so when oil prices were low last year.
Kevin Hassett, Director of the National Economic Council, stated on Friday that tapping into the Strategic Petroleum Reserve is currently not under consideration. Congressman August Pfluger, a Republican representative from West Texas, criticized that the depletion of reserves has left the U.S. &#34;in an extremely vulnerable position.&#34;
He told the Financial Times, &#34;I have been warning for years that using the strategic reserves for short-term political purposes undermines long-term energy security. Now, at a time when we truly need this emergency buffer, the reserve levels are far below what they should be. This is a serious national security issue.&#34;
<h2>Market Pressure at Critical Point, Policy Credibility Questioned</h2>
Some experts have criticized the crisis management approach of the Trump administration. Michael Alfaro, Chief Investment Officer of energy and industrial hedge fund Gallo Partners, stated, &#34;Many policy decisions made or hinted at by the government in the past 48 hours show a frantic eagerness to appease the oil market.&#34;
He warned that, if there are no signs of the Strait of Hormuz reopening by Monday, commodity prices will face a new round of skyrocketing.
However, some have defended the White House's strategy. Dan Brouillette, who served as Energy Secretary during Trump's first term, told the Financial Times that the government has a longer-term perspective than the financial markets. &#34;High oil prices are only temporary. Now is the time to remove this regime and completely end its decades-long extortion of the Strait.&#34;

This week, the U.S. government announced measures such as providing insurance and escort for transit oil tankers, temporarily easing sanctions on Russian crude oil, and boosting Venezuela's oil production. However, most experts believe that only a rapid restoration of the navigability of the Strait of Hormuz can fundamentally reverse the trend of oil prices. Brent crude oil closed this week at $93 per barrel, with a weekly increase of 28%, reaching a new high since 2023

- The U.S. military actions in Iran have caused a surge in oil prices, prompting experts to warn that reopening the Strait of Hormuz is crucial for stabilizing the market.  
- The Trump administration has implemented measures, including providing insurance for tankers and easing sanctions on Russian oil, yet experts agree these steps alone are insufficient without restoring traffic through the strait.  
- With Brent crude reaching $93 per barrel and predictions of prices potentially exceeding $100 soon, the overall sentiment indicates a pressing need to address the strait's accessibility for global oil supply stability.

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If the U.S. really wants to suppress oil prices, there is "almost only one way": the Strait of Hormuz