According to informed sources, the Trump administration is considering releasing strategic petroleum reserves, suspending federal gasoline taxes, and even having the Treasury Department intervene in the crude oil futures market. However, analysts warn that no policy can replace the navigability of the Strait of Hormuz.
According to informed sources, U.S. President Trump is weighing a range of potential options to address the surge in oil and gasoline prices following the Iran war.
These discussions come as crude oil prices surged above $100 per barrel on Monday before retreating amid volatile trading. The average retail price of gasoline in the United States rose to its highest level since August 2024.
Sources, who requested anonymity to detail private discussions, said that measures recently debated by Trump administration officials include releasing emergency reserves, suspending the federal gasoline tax, and having the Treasury Department intervene in the crude oil futures market.
The suspension of taxation requires congressional approval, which was something Biden failed to achieve in 2022. The effectiveness and mechanism of the Treasury's crude oil measuresFutures Tradingremain questionable.
"The White House is maintaining ongoing coordination with relevant agencies on this critical issue, as it is a top priority for the president," White House spokesperson Taylor Rogers said in a statement. "Before the start of 'Operation Epic Fury,' President Trump and his entire energy team had formulated a robust plan to maintain stability in the energy markets, and they will continue to review all viable options."
The Strait of Hormuz, through which about one-fifth of the world's oil typically passes, remains largely paralyzed due to the conflict. Brent crude, the global oil benchmark, surged to over $120 per barrel on Monday, marking a rise of more than 60% since the start of the Iran war. It later gave back some gains as major economies considered a coordinated release of emergency oil reserves.
Trump earlier on Monday, in an interview with the New York Post, insisted that he has a plan to address energy cost issues but provided no further details. He also told CBS that traffic of ships through the Strait of Hormuz has increased and that he is "considering taking control of it."
The White House has been weighing the use of the National Emergency Petroleum Reserve, the U.S. Strategic Petroleum Reserve, which was established after the Arab oil embargo in the 1970s. The reserve currently holds approximately 415 million barrels of crude oil, about 60% of its capacity.
Such releases could be coordinated with other countries. G7 ministers said on Monday that they are prepared to release oil reserves if needed, though "no agreement has yet been reached." According to CNBC, the U.S. stance involves a coordinated release of up to 400 million barrels of crude oil.
"We will continue to closely monitor developments in the energy markets and convene meetings as necessary to exchange information and coordinate actions within the G7 and with international partners," the group said in a statement. "We stand ready to take necessary measures, including through the release of reserves, to support global energy supplies."
This statement appears to have reassured the markets. Trump officials had previously downplayed the idea of a U.S. release from its strategic reserves.
Republicans sharply criticized multiple reserve releases under former President Biden, including the sale of 180 million barrels of crude oil aimed at reducing gasoline prices following Russia's military operation in Ukraine in 2022.
Nevertheless, analysts suggest that the impact of any reserve release, even if coordinated with member countries of the International Energy Agency, may be limited and contingent on the duration of the conflict in the Middle East and disruptions in the Strait of Hormuz. Another challenge is the rate at which oil flows out of the reserves.
Other potential options for Trump include calling for a temporary suspension of the federal gasoline tax, currently set at 18.4 cents per gallon for gasoline and 24.3 cents per gallon for diesel.
While such a move would reduce fuel costs for consumers, it could cut billions of dollars from the government's primary fund used to finance roads, bridges, and public transportation.
One option Trump has evidently ruled out — at least for now — is seizing Iran's oil. He told NBC News on Monday that while 'there has certainly been talk about it,' it is too early to discuss such measures.
Bob McNally, president of consulting firm Rapidan Energy Group, said there may be creative options to mitigate price spikes, but none can offset a 20% supply shock.
"None of the policy tools I am familiar with can come close to achieving that effect. There is no substitute for restoring navigation through the Strait of Hormuz — that’s it, there is no other way," he said.
Editor/Lambor
