If the U.S. really wants to lower oil prices, it "almost has only one way": the Strait of Hormuz.

As the U.S. nears the end of its policy toolbox amid a surge in oil prices triggered by military action in Iran, experts warn: If the Strait of Hormuz cannot be quickly reopened, all other measures from Washington will be of little effect.

This week, the Trump administration announced measures such as providing insurance and escorts for transiting oil tankers, temporarily easing sanctions on Russian crude, and discussing options to boost Venezuelan oil output. However, most experts agree on one conclusion: Only a swift restoration of transit capacity through the Strait of Hormuz can fundamentally reverse oil price trends.

Brent crude closed this week at $93 per barrel, up 28% for the week, hitting a new high since 2023; the U.S. benchmark, West Texas Intermediate, surged 36% to $91 per barrel, marking the largest single-week increase since 1983.

According to a previous article by WallstreetCN, Goldman Sachs warns that if no solution appears by this weekend, crude prices will break the $100 per barrel mark next week; If the Strait’s obstruction lasts through March, oil prices could surpass historical peaks seen in 2008 and 2022 ($147).

The Strait is Core, Other Options Have Limited Marginal Impact

Mike Sommers, CEO of the American Petroleum Institute, stated bluntly, "The real focus must be on unblocking the Strait of Hormuz, because all other methods, even in combination, cannot provide the stability the global economy needs." He added that other options "have only marginal impact" on prices.

The Strait of Hormuz is the passageway for about one-fifth of global oil supply. Currently, traffic has dropped sharply; in the past week, fewer than 50 vessels have passed through, while about 500 oil and gas tankers are stranded in surrounding waters. Ship owners say they will not risk sending ships through the strait until safety can be guaranteed.

Escorts, Eased Sanctions, Output Boost: Multiple Measures Still Hardly Solve the Immediate Emergency

The Trump administration rolled out multiple emergency measures intensively this week. On insurance, the Development Finance Corporation announced a $20 billion reinsurance plan for transiting oil tankers; however, insurance industry experts question whether the agency can offer effective coverage sufficient to restore shipowners’ confidence.

On the supply side, the U.S. Treasury on Thursday temporarily eased sanctions on Russian crude exports to India, and hinted at expanding exemptions. Treasury Secretary Besant said, "We might lift sanctions on more Russian crude; a large amount of sanctioned crude is floating at sea. In essence, by lifting sanctions, the Treasury can create supply."

Officials also mentioned the possibility of increasing Venezuelan crude output. After the Maduro regime was overthrown in January, the U.S. has taken over local production operations. However, the market remains doubtful whether these measures can quickly provide effective supply.

Strategic Petroleum Reserved is Depleted, Policy Buffer Shrinks Sharply

Washington’s ability to address this crisis is also restricted by severe depletion of the Strategic Petroleum Reserve (SPR). In 2022, then-President Biden released large volumes from the reserve to curb oil price increases due to the Russia-Ukraine conflict, resulting in a sharp drop in stocks. Trump promised to replenish reserves after taking office, but failed to do so last year when oil prices were low.

National Economic Council Director Kevin Hassett said Friday that tapping strategic reserves is currently not being considered. House Representative from West Texas and Republican August Pfluger criticized that the reserve depletion puts the U.S. "in an extremely vulnerable position."

He told the UK’s Financial Times, "I’ve warned for years that using strategic reserves for short-term political purposes undermines long-term energy security. Now, at a moment when we truly need this emergency buffer, the reserve is far below the needed level. This is a serious national security issue."

Market Pressure Has Hit the Critical Point, Policy Credibility in Question

Some experts have criticized the Trump administration’s crisis response. Michael Alfaro, Chief Investment Officer of Gallo Partners (an energy and industrial hedge fund), said, "In the past 48 hours, many policy decisions made or hinted at show an urgent and somewhat panicked attempt to calm the oil market."

He warned that if no signal emerges by Monday that the Strait of Hormuz will soon reopen, a new round of commodity price surges will ensue.

However, some have defended the White House strategy. Dan Brouillette, who served as Secretary of Energy during Trump’s first term, told the Financial Times that the government holds a longer-term view than financial markets. "High oil prices are only temporary. Now is precisely the time to remove this regime and fully end its decades-long extortion over the Strait."

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