Oil Holds Above $100 as Hormuz Crisis Deepens and Deadlines Approach

World markets are watching the dramatic escalations between the US and Iran. President Trump has given Iran until 8pm EST to reopen the Strait of Hormuz or be bombed “back to the Stone Age.” Oil prices remain elevated, with WTI crude still above $110, diesel around $4.40, and gasoline around $3.30. With the IEA director calling this the worst energy crisis in modern history, all eyes are on the US and Iran and how they choose to proceed.

The key driver remains the ongoing threat towards the Strait of Hormuz, which typically handles about 20% of global oil supply, keeping markets tight and highly reactive to geopolitical developments. President Donald Trump is demanding that Iran reopen the strait or face significant escalation. Iran has rejected a temporary ceasefire proposal, instead calling for a permanent end to the conflict along with broader guarantees. As the deadline approaches, both rhetoric and military activity have intensified, including strikes on infrastructure and threats targeting energy assets across the region.

The impact on global energy flows is significant. Exports from Gulf producers have dropped sharply due to restricted access through Hormuz, forcing refiners in Europe and Asia to scramble for alternative supply. This has pushed spot premiums higher and even flipped traditional pricing relationships, with prompt U.S. crude trading at a premium to Brent. At the same time, Saudi Arabia has raised official selling prices to record levels, reflecting the tight supply environment.

Beyond crude markets, the broader energy system is feeling the strain. According to the International Energy Agency, the current disruption is more severe than past crises in 1973, 1979, and even 2022 combined. Strategic reserves are being released, but the scale of the disruption, combined with ongoing conflict, continues to push prices higher and increase risks for global inflation, particularly in developing economies.

Meanwhile, additional supply-side pressures are emerging. Attacks on infrastructure, including pipeline terminals and petrochemical facilities, are adding to market concerns. Even where production capacity exists, logistics constraints are limiting the ability to move barrels to market. OPEC+ has announced production increases, but much of that supply may not reach the market under current conditions.

Policy Makers Efforts  

Since the start of the war on February 28, crude prices have increased significantly, with refined products like diesel following the same upward trend and putting sustained pressure on the market. Today, we’ll review all the actions that policymakers have taken to try and address supply and price concerns in the US.

The most direct action was through the Strategic Petroleum Reserve (SPR). The U.S. has authorized the release of 172 million barrels of crude oil, which will be delivered into the market over roughly four months. This is part of a broader, coordinated effort with international partners through the International Energy Agency, totaling around 400 million barrels globally.

To put that in context, this is one of the largest coordinated releases on record. By comparison, the U.S. released about 180 million barrels in 2022 following the Russia-Ukraine conflict. The goal is straightforward: add supply to a market that is currently constrained and give refiners the ability to maintain production levels. While this does not solve long-term supply issues, it helps reduce the risk of sharper price spikes in the near term.

On the logistics side, policymakers have focused on improving how fuel moves across the country – including domestic routes to Alaska and Hawaii. A key measure has been the temporary (60-day) waiver of the Jones Act. Under normal rules, fuel transported between U.S. ports must be carried on U.S.-flagged vessels, which limits shipping capacity. The waiver allows foreign-flagged vessels to participate, increasing flexibility and helping move gasoline and diesel into regions with tighter supply. This becomes especially important during disruptions, when regional imbalances can quickly push prices higher.

Regulatory flexibility has also been used to expand supply. The Environmental Protection Agency (EPA),  in consultation with the U.S. Department of Energy and in accordance with the Clean Air Act, has issued waivers allowing a broader range of gasoline blends, including E15, to be sold during periods when they would typically be restricted. In addition, adjustments to fuel specifications, such as Reid Vapor Pressure (RVP) limits, reduce the need for highly specialized blends. These changes help simplify the system, allowing fuel to move more freely across regions and increasing the total pool of available product.

At the consumer level, fuel tax relief has provided more immediate support. Georgia has temporarily suspended gasoline and diesel taxes, while several other states are considering similar measures. This directly lowers the cost per gallon at the pump, offering short-term relief.

• Georgia has implemented a 60-day suspension of gasoline and diesel taxes following the start of the war, becoming the first state to act in response to the latest price increases. The suspension runs until May 18th and temporarily eliminates the state’s $0.333 per gallon tax on regular gas and $0.373 per gallon tax on diesel.
• Connecticut Governor Ned Lamont is pushing to suspend the state’s gasoline tax to provide relief from rising fuel prices. Although proposed, the holiday has faced legislative hurdles and has not yet been finalized.
• New York lawmakers are pushing for a partial suspension of fuel. While the state implemented a broad tax holiday in 2022, proposals for 2026 are more targeted. For example, one proposal in Rockland County would remove the local sales tax on gasoline priced above $3 per gallon from June 2026 through March 2027.
• Maryland is also seeking a pause in the state’s gas tax.
• Florida lawmakers are calling for a temporary tax suspension – aimed at lowering pump prices during peak periods.

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