International oil prices have surged significantly due to the conflict between the U.S. and Iran. According to the latest reports on Wednesday, the IEA plans to propose the release of the largest-ever strategic oil reserves, potentially exceeding the 182 million barrels released during the 2022 Russia-Ukraine conflict. G7 leaders will hold an emergency conference call.
However, Natasha Kaneva, head of commodity research at JP Morgan, stated in a recent report: Unless the safe passage through the Strait of Hormuz is guaranteed, all policy tools will have very limited impact on oil prices, as potential supply losses in the next two weeks could reach up to 12 million barrels per day (12 mbd).
JP Morgan indicated that Trump is reviewing several measures to suppress oil prices, including limiting U.S. exports, intervening in the oil futures market, waiving certain federal taxes, and suspending the Jones Act requirements. Trump has stated that the U.S. is &#34;far beyond a 4 to 5-week timeframe&#34; and claimed that &#34;the war could end soon,&#34; further lowering oil prices.
However, JP Morgan believes that short-term policy &#34;verbal interventions&#34; can suppress oil price sentiment, but the structural supply gap far exceeds the actual coverage capacity of policy tools. Whether safe passage through the Strait of Hormuz can be restored is the real key variable determining oil price trends. High volatility in the energy market will continue to exist until the situation clarifies.
<h2>Big Move One: Release Strategic Petroleum Reserves (SPR) — A Drop in the Bucket</h2>
G7 governments are discussing a coordinated release of 300 to 400 million barrels of strategic reserves under the IEA's coordination. JP Morgan estimates that participating countries could achieve a release rate of about 1.2 million barrels per day (1.2 mbd), but this is far from enough to fill the potential gap.
Key data is as follows:
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Total OECD Strategic Reserves: 1.247 billion barrels, including 935 million barrels of crude oil and 312 million barrels of refined oil.
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Current Status of U.S. SPR: Approximately 415 million barrels, about 58% of capacity, with physical limitations on salt cavern integrity and extraction rates, making the actual release rate likely lower than the average of 1 million barrels per day in 2022.
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Legal Bottom Line: Congress mandates a minimum SPR inventory of 252.4 million barrels, and the president can exceed this limit by declaring a &#34;severe energy supply interruption&#34; (Biden invoked this power in spring 2022 to trigger the sale of 180 million barrels); however, the actual operational bottom line is about 150 to 160 million barrels to maintain salt cavern stability.
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Execution Lag: After the presidential order is issued, the Department of Energy requires about 13 days to complete contract awarding and begin delivery, followed by additional transportation time to reach end consumers.
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Historically, the peak emergency release by the OECD was about 1.4 million barrels per day. Even if a release rate of 1.2 million barrels per day is achieved, it is merely a drop in the bucket against a potential daily supply loss of 12 million barrels in two weeks.
<h2>Big Move Two: Limit U.S. Exports — Short-term Price Suppression, Long-term Counterproductive</h2>
Trump has the authority to limit crude oil and refined oil exports during a national emergency, with legal tools including the International Emergency Economic Powers Act (IEEPA), the Energy Policy and Conservation Act, and the Export Control Reform Act of 2018
Since the lifting of the crude oil export ban in 2015, the United States has become one of the largest suppliers in the world, exporting about 4 million barrels of crude oil daily, along with a large amount of diesel, gasoline, and other refined products to Europe, Latin America, and Asia.
Short-term effect: Limiting exports would &#34;trap&#34; barrel oil within the United States, lowering domestic oil prices.
Long-term risk: A sudden reduction in international market supply would lead to immediate shortages for overseas refineries, causing international benchmark oil prices to rise significantly; at the same time, a decrease in prices for U.S. producers would suppress drilling enthusiasm, further tightening the global supply-demand balance, ultimately creating upward pressure on both global and U.S. oil prices.
<h2>Big Move Three: Exempt the Jones Act - Better Combined with SPR Effects</h2>
The Jones Act (1920 Merchant Marine Act) requires that vessels transporting goods between U.S. ports must be built in the U.S., fly the U.S. flag, and be crewed by U.S. personnel. The administration can grant temporary exemptions in cases of national defense needs or emergencies, which have been invoked multiple times after major hurricanes to allow foreign tankers to transport fuel between U.S. ports.
Policy combination effect: Combining the release of the SPR with a temporary exemption from the Jones Act would yield more significant policy effects. Without the exemption, the limited capacity of U.S.-flagged tankers would restrict the speed at which SPR crude oil reaches key refining centers or areas facing supply shortages.
<h2>Big Move Four: Exempt Federal Fuel Taxes - Requires Congressional Legislation, Difficult to Implement</h2>
The federal gasoline tax is 18.4 cents per gallon, and the diesel tax is 24.4 cents per gallon, both used to fund the Highway Trust Fund. A complete suspension of the federal fuel tax would almost certainly require legislation from Congress and the president's signature, while the administration can only provide limited administrative relief (such as deferral of payments) in emergencies.
In contrast, state governments have greater flexibility. Several states temporarily suspended state-level fuel taxes during the spike in oil prices in 2022, with state fuel tax rates ranging from about 15 cents to over 50 cents per gallon. Suspension can provide short-term price relief for consumers but will simultaneously reduce fiscal revenue for transportation infrastructure and road maintenance.
<h2>Big Move Five: Relax E15 Gasoline Blending Regulations - Overall Impact Limited</h2>
The U.S. Environmental Protection Agency (EPA) can grant emergency exemptions under the Clean Air Act, allowing the nationwide sale of E15 gasoline containing 15% ethanol during the summer driving season (which is normally restricted in summer due to air quality regulations). This move can moderately expand the gasoline supply pool by allowing a higher percentage of ethanol blending, alleviating price pressure at gas stations, but the overall impact is limited.
<h2>Big Move Six: Relax Reid Vapor Pressure (RVP) Standards - Slightly Better than E15, but Still Mild</h2>
RVP exemptions allow refiners to sell winter-grade gasoline for a longer period during the summer, directly expanding the total amount of fuel that can be legally sold. The EPA can temporarily relax RVP restrictions under the Clean Air Act, allowing refiners to quickly increase supply using existing inventories and simpler blending processes.
Its effect is slightly better than the relaxation of E15 regulations—typically alleviating regional shortages and reducing oil prices by a few cents per gallon—and because it directly increases the amount of gasoline available for sale, it takes effect faster than other regulatory adjustments. However, overall, the impact remains mild
<h2>The Real Key: When Will the Strait of Hormuz Reopen?</h2>
JP Morgan's conclusion is incisive: All of the aforementioned policy measures will have very limited impact on oil prices until safe passage through the Strait of Hormuz is guaranteed.
The current situation is as follows:
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The U.S. Maritime Administration (MARAD) canceled its previous advisory for commercial vessels to avoid the Strait of Hormuz and the Persian Gulf last weekend (the advisory was originally set to last until March 13), but this is only a necessary condition for restoring passage, not a sufficient one.
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The U.S. Navy and Central Command (CENTCOM) have not announced that the strait is open for safe passage, nor is there evidence of mine-sweeping or escort plans.
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Energy Secretary Wright refused to provide a specific timeline for reopening on Sunday and acknowledged that military escorts have not yet begun.
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Current aircraft carrier deployment: USS Abraham Lincoln (still conducting strike missions against Iran in the Arabian Sea; USS Gerald R. Ford is transiting the Red Sea; the third carrier, USS George H.W. Bush, completed pre-deployment training last Thursday and would take about 10 to 12 days to reach a broader area in the Middle East if ordered to depart immediately.
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The French Navy will also participate in the defense mission to reopen the strait, with the Charles de Gaulle aircraft carrier arriving in Cyprus on Monday. French President Macron stated that the escort mission in Hormuz would only be feasible after the most intense phase of the war.
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The Current U.S. Strategic Focus is on weakening Iran's asymmetric warfare capabilities that threaten commercial shipping. Once these disruptive capabilities are sufficiently suppressed, the confidence of commercial tankers crossing the Strait of Hormuz can be restored with U.S. Navy escorts and government-backed insurance guarantees. A formal statement from the U.S. Navy or Central Command regarding safe passage through the Strait of Hormuz, along with the substantive initiation of escort operations—this will be the true trigger for a turning point in oil prices

The US-Iran conflict has triggered a surge in oil prices, with the IEA planning to release the largest strategic reserves in history, and the G7 holding urgent consultations. However, JP Morgan bluntly stated that the six policy tools, including releasing reserves, restricting exports, and exempting fuel taxes, are all "a drop in the bucket." The potential daily supply disruption in the Strait of Hormuz could reach 12 million barrels, far exceeding the coverage capacity of any policy. The only real turning point for oil prices is when the US Navy officially announces safe passage through the Strait of Hormuz

- Rising international oil prices are largely attributed to ongoing conflicts between the U.S. and Iran, prompting discussions by the IEA and G7 leaders on releasing strategic reserves.  
- Morgan Stanley asserts that unless safe passage through the Strait of Hormuz is secured, the impact of policy measures on oil prices will be limited, given potential supply losses of up to 12 million barrels per day.  
- The real determinant for oil price trends hinges on the reopening of secure navigation in the Strait, with current high volatility in the energy market expected to persist until then.

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In addition to releasing strategic oil reserves, the United States has "six major moves," but if the Strait of Hormuz is blocked, the "impact will be limited."