Strait of Hormuz: Impact & Response Hub

Strategic petroleum reserves (SPRs) are emergency stockpiles of crude oil held by governments, including a large U.S. reserve stored in salt caverns along the Gulf Coast. While these reserves can be tapped during major disruptions — like the current conflict affecting the Strait of Hormuz — they are not a complete solution. Even large-sounding releases, such as the International Energy Agency’s 400 million barrels, only amount to about four days of global oil supply. Additionally, the infrastructure connecting these reserves to refineries allows for distribution across multiple regions, but it still takes time to move this oil into the market.

Ultimately, SPRs are a short-term tool that help stabilize supply and buy time for producers to respond, but they don’t address the root issue of disrupted global oil flows. The pace of release is relatively slow compared to total global demand, and drawing down reserves also limits future flexibility if the crisis continues. While these actions may help ease immediate pressure, they are unlikely to significantly lower gas prices on their own without a broader resolution to supply constraints.

Gas prices have been especially volatile in recent weeks due to the conflict in the Persian Gulf, but they’re still less volatile than oil prices themselves. That’s because oil is a global commodity with relatively fixed demand — consumers and businesses don’t quickly change how much they use — and limited short-term supply flexibility, since increasing or decreasing production is complex and slow. As a result, even small imbalances between supply and demand can lead to large swings in oil prices, which then ripple through wholesale gasoline markets.

However, those fluctuations aren’t fully passed on to consumers at the pump. Gas stations intentionally smooth price changes, typically updating prices no more than once per day to avoid frustrating customers. While prices may rise quickly when costs increase, they tend to decline more gradually over time. This means consumers still feel the impact of global disruptions, but not with the same minute-by-minute volatility seen in oil and wholesale fuel markets.

The White House’s temporary waiver of the Jones Act — a law requiring goods shipped between U.S. ports to use American-built and operated vessels — is intended to lower domestic fuel transportation costs. By allowing more ships to move oil and gasoline between U.S. ports, the policy increases competition and may reduce shipping expenses in some regions. However, transportation is only a small part of total fuel costs, so the overall impact on gas prices will be limited.

In reality, the benefits will be highly localized. Puerto Rico and Florida, which rely on Gulf Coast fuel shipments, may see slight relief or slower price increases. But for most of the U.S. — including the Northeast, Hawaii, and Alaska — the effect will be minimal due to existing supply patterns. With global oil market disruptions still driving prices, the waiver is unlikely to significantly lower prices at the pump nationwide.

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The current oil supply shock tied to the Iran conflict is, in many ways, more severe than the disruption caused by Russia’s 2022 invasion of Ukraine — temporarily removing up to 20% of global oil supply due to the Strait of Hormuz blockade. However, there are key differences that could prevent gas prices from reaching the same extremes.

Unlike in 2022, when sanctions lasted for years and oil markets were already tight, today’s prices started lower and markets are expecting a shorter disruption. The critical variable is timing: if the Strait reopens within weeks, price spikes may be contained. If closures persist into the summer, gas prices could exceed 2022 highs, creating a more prolonged impact for consumers and retailers.

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As gas prices rise amid the conflict with Iran, some consumers may wonder if stations are taking advantage — but early data tells a different story. Fuel retailers have actually seen profit margins dip immediately following the disruption, as rising oil prices increased wholesale gasoline costs (rack prices) passed down from refineries.

While pump prices have gone up, stations are largely maintaining typical margins and adjusting prices cautiously to manage volatility. In reality, gas stations aren’t benefiting from higher prices—they’re navigating tighter margins and higher costs, aiming to stay profitable while minimizing the impact on customers.

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With oil prices surging, it may seem like the U.S. or OPEC could simply increase production to stabilize the market — but the reality is far more complex. U.S. oil production requires significant time, investment, and long-term certainty, making companies hesitant to ramp up output during what could be a short-lived disruption.

Meanwhile, many key OPEC producers are unable to bring additional supply to market due to their reliance on the Strait of Hormuz, which remains effectively closed. Add in ongoing sanctions on Russia, and global supply options become even more constrained. Until the Strait of Hormuz reopens, there is no quick fix — leaving oil and gas prices elevated in the near term.

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Iran plays an outsized role in global oil markets — not because of how much oil it produces (just ~3% of global supply), but because of where it sits. Positioned along the Strait of Hormuz, a critical shipping chokepoint through which roughly 20% of the world’s oil flows, Iran effectively controls one of the most important arteries in global energy trade.

With the strait currently closed following recent conflict, a significant portion of global supply has been disrupted—driving sharp increases in oil and gas prices. Until the Strait of Hormuz reopens, any relief at the pump is likely to be short-lived, with ongoing volatility impacting both consumers and retailers.

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