Stopgap Measures Don't Halt Oil Prices 04/07 06:04

   Global leaders have been scrambling to contain the rising cost of oil and 
gasoline since the start of the Iran war, which took a record amount of oil off 
the market when tankers full of crude were stranded in the Persian Gulf and 
military strikes damaged refineries, pipelines and export terminals.

   NEW YORK (AP) -- Global leaders have been scrambling to contain the rising 
cost of oil and gasoline since the start of the Iran war, which took a record 
amount of oil off the market when tankers full of crude were stranded in the 
Persian Gulf and military strikes damaged refineries, pipelines and export 
terminals.

   Hoping to ease some pain for consumers, President Donald Trump and other 
heads of state have been pulling on various levers, launching more oil on the 
market in a bid to calm the chaos.

   A group of 32 nations that are members of the International Energy Agency 
began releasing the largest volume of emergency oil reserves in its history: 
400 million barrels. Trump is tapping into oil from the Strategic Petroleum 
Reserve while lifting sanctions on Russian and Iranian crude and temporarily 
waiving the Jones Act, a maritime law that requires ships carrying goods 
between U.S. ports to be U.S.-flagged.

   But despite those maneuvers, crude oil has soared well past $100 a barrel 
and gasoline is selling for $4.14 a gallon on average in the U.S. While the 
stopgaps are helping, they're not adding up to enough oil to replace what's 
stranded, experts say.

   "They're all incremental," said Mark Barteau, professor of chemical 
engineering and chemistry at Texas A&M University. "You're talking about these 
different patches being at the level of maybe 1 to 2 million barrels a day 
each, and you've got to get to 20, so it's hard to see those actually adding up 
to the numbers that are needed. And then the question is, how long can you 
sustain those?"

   Trapped oil

   Before the war began, roughly 15 million barrels of crude oil and 5 million 
barrels of oil products passed daily through the Strait of Hormuz, the narrow 
mouth of the Persian Gulf, amounting to about 20% of global oil consumption, 
according to the International Energy Agency.

   In addition to that loss, some oil producing nations in the Middle East have 
halted oil production because they can't ship fuel out of the Gulf and their 
storage tanks are full. That's taken about 10 million barrels per day off the 
market, the IEA said.

   Then there are the eight countries around the Persian Gulf that together 
hold about 50% of global oil reserves. Under normal circumstances, they 
coordinate closely to raise or lower their output to keep prices steady, said 
Jim Krane, energy research fellow at Rice University's Baker Institute. Usually 
Saudi Arabia steps in to bring spare oil to market and calm things down, he 
said.

   "But all of that spare capacity is also bottled up inside the Persian Gulf 
right now and it can't get to market either," Krane said. "So the main 
emergency response system that we have is also blocked."

   The IEA said in its recent report that "the resumption of transit through 
the Strait of Hormuz is the single most important action to return to stable 
oil and gas flows and reduce the strains on markets and prices."

   Barring that, world leaders are grasping for ways to free up more oil.

   Limitations of short-term fixes

   Some nations have found workarounds to move oil out of the Gulf. Saudi 
Arabia is using its East-West pipeline, which stretches from the Persian Gulf 
to the Red Sea, to transfer about 5 million barrels per day out of the Gulf, 
said Michael Lynch, distinguished fellow at Energy Policy Research Foundation, 
a non-partisan institution focused on energy and economics. But the nation was 
already using that pipeline to transport oil, so it doesn't have a lot of spare 
room to move oil from stranded tankers.

   Trump also temporarily lifted sanctions on approximately 140 million barrels 
of Iranian oil that was already in transit. But that didn't add oil to the 
market -- it just widened the pool of potential buyers, said Daniel Sternoff, 
senior fellow at the Columbia Center on Global Energy Policy.

   Typically, most Iranian oil was bought by private refiners in China, who 
purchased it at a steep discount, Sternoff said. But with sanctions lifted, 
others could scramble to buy the oil, which in turn raises its price to the 
benefit of Iran, he said.

   "As soon as you are moving to waive sanctions on your adversary with whom 
you're fighting a military conflict, to do something in their benefit, it just 
shows you that you are running out of options to try to prevent a rise in the 
price of oil," Sternoff said.

   The decision to lift sanctions on Russian oil could have more impact, 
because Russia had been storing unpurchased oil in tankers, Sternoff said. "By 
waiving sanctions, it will allow those barrels to clear."

   Trump's temporary waiver of the Jones Act to allow foreign ships to 
temporarily transport goods between U.S. ports could potentially help ease 
natural gas prices by enabling companies to more efficiently ship liquefied 
natural gas from the Gulf Coast to New England.

   But experts don't expect the waiver to significantly impact the price of oil 
or gasoline. "It's helpful, but not a game changer," Lynch said.

   Why U.S. oil production can't solve the problem

   The U.S. is a major oil producer, and exports more oil than it imports. But 
like any other oil producing nation, it can't just ramp up production instantly 
to fill the void.

   "If the U.S. were to try to make up the global shortfall, we would need to 
nearly double our production," Barteau said. "We couldn't drill wells that fast 
even if we wanted to."

   Increasing domestic production by even 1 million barrels per day, a feat the 
U.S. accomplished during the shale boom, would be hard to duplicate, Lynch said.

   "If we run every drilling rig right now, what happens a week from now when 
the war is over and the price goes back down $20?" Lynch asked. "People don't 
want to develop long-term production based on a short-term price spike."

   Halting exports and using that oil within the U.S. wouldn't bring down 
gasoline prices either, experts say.

   For one, oil is traded on a global market, so events happening halfway 
around the globe impact prices for everyone.

   In addition, the U.S. doesn't produce enough of the type of oil its 
refineries process. It produced about 13.7 million barrels per day of oil at 
the end of 2025, according to the Energy Information Administration. And 
refineries processed about 16.3 million barrels per day that year, relying on 
imports to fill in the gaps, according to the American Fuel and Petrochemical 
Manufacturers (AFPM), a trade association.

   That's because nearly 70% of U.S. refineries are set up to process heavy, 
sour crude, according to AFPM. But much of the oil produced in the U.S. is 
light, sweet crude, which was unlocked during the shale revolution.

   "They need different crudes than the ones that are being produced right next 
to them now," Krane said.

   As a result, just 60% of the crude oil processed in U.S. refineries is 
extracted domestically, according to the AFPM. And retooling domestic 
refineries would cost billions of dollars, the group said. It also would 
require shutting down the refinery for a period of time, which generally raises 
gasoline prices.

   "A lot of people like the IEA are making the point that this is the biggest 
oil crisis ever, which is partly true, partly an exaggeration, depending on how 
you count things," Lynch said. "A lot of it has to do with how long does this 
last ... if it goes on for another six weeks we get to be in some serious 
trouble."