The key driver of the spike in oil prices is the virtual halt in sea traffic through the Strait of Hormuz - a key Gulf waterway through which a fifth of global crude passes - since the war broke out on February 28.
Trump said last week that the US Navy was ready to escort tankers through the strait “if necessary” and ordered the US to provide insurance for commercial shipping.
However, there has been no sign yet of such US escorts.
And while French President Emmanuel Macron said today that France and its allies are already preparing a “defensive” mission to reopen the strait, he added that it would only happen “after the end of the hottest phase of the conflict”.
Strategic reserves
One major option under consideration around the world is tapping into strategic oil reserves -- but it is one Trump played down at the weekend.
“We’ve got a lot of oil, our country has a tremendous amount,” Trump told reporters aboard Air Force One. “That’ll get healed very quickly.”
Trump has somewhat replenished the US Strategic Petroleum Reserve, which now has 415 million barrels, enough to fill up more than 600 million cars once the oil is refined.
The US Government has made four major oil withdrawals in recent history: at the end of the first Gulf War, after Hurricane Katrina, after the Libyan revolution, and during Joe Biden’s presidency.
But it could have a limited effect.
“A release of the SPR can help mitigate some of the supply disruption, but it’s clearly not enough to overcome the loss of 20 million barrels a day of oil through the Strait of Hormuz,” Andy Lipow of Lipow Oil Associates told AFP.
The G7 group of industrialised nations is “not there yet” in terms of any release of strategic oil reserves, France’s Finance Minister said today.
Sanctions relaxation
The US said last week that it was considering lifting sanctions on more Russian oil, a day after temporarily allowing India to buy from Moscow -- a move that could ultimately fund Russia’s war on Ukraine.
Trump said on Sunday that he would be prepared to take similar measures in the future “just to take a little of the pressure off, the oil pressure”.
But all of the above options risk having a limited effect.
“It seems as though the Trump Administration may not have fully appreciated the cause and effect related to the initiation of this war in this region that’s so vital for the global economy,” Clayton Seigle, senior fellow at the Centre for Strategic and International Studies, told AFP.
Venezuela option
In the longer-term, speculation has swirled about whether Trump will seek to take control of Iran’s oil, as the US did after the military operation that toppled Venezuelan leader Nicolas Maduro in January.
The US President has boasted that 80 million barrels of Venezuelan crude has been shipped to the US under a deal with the new leadership in Caracas.
Trump says it’s too early to talk about, with the war still raging and Iran’s clerical establishment just picking Ayatollah Mojtaba Khamenei to replace his slain father as Supreme Leader.
“You look at Venezuela,” Trump told NBC News today. “People have thought about it, but it’s too soon to talk about that.”
-Agence France-Presse
