Despite US resolve to defend Hormuz… “Trump has limited tools to curb oil prices”

An analysis has found that the United States has limited means to curb rising energy prices stemming from the Iran situation.

According to Walter Bloomberg on the 5th (local time), Wolfe Research said in a recent report that “there are not many policy tools the Trump administration can use to restrain energy prices rising due to escalating tensions with Iran.”

Wolfe Research assessed that the Trump administration has only three to four cards it can play to prevent oil prices from climbing. Wolfe Research said, “(one of the tools to curb oil prices is) introducing a government-backed marine insurance program under the authority of the US International Development Finance Corporation (DFC) and, through it, encouraging tanker operations transiting the Strait of Hormuz,” adding that “other measures include releases from the US Strategic Petroleum Reserve (SPR), adjustments to biofuel rules, and a temporary gasoline tax holiday.”

Wolfe Research noted, however, that “a gasoline tax holiday requires congressional approval.” It added that “experts believe the trajectory of energy prices will be driven more by the actual conflict situation itself than by (US) policy actions.”

Meanwhile, President Trump recently said he would provide US Navy military protection for tankers transiting the Strait of Hormuz. This is interpreted as meaning the US could directly defend international energy shipping lanes by deploying its military power in response to Iran’s threat to block the Strait of Hormuz.