Global leaders have been working to address rising oil and gasoline costs since the outbreak of conflict in the Middle East. Efforts have included releasing strategic reserves and temporarily waiving the Jones Act, a maritime law requiring U.S.-flagged ships for transport between U.S. ports.

Limited Impact of Current Measures

Despite these interventions, the increase in oil supply isn’t keeping pace with the shortfall. The average price of gasoline in the U.S. continues to climb. “They're all incremental,” said Mark Barteau, professor of chemical engineering and chemistry at Texas A&M University. “You’re talking about these different patches being at the level of maybe 1 to 2 million barrels a day each, and you’ve got to get to 20, so it’s hard to see those actually adding up to the numbers that are needed. And then the question is, how long can you sustain those?”

Disruptions in the Persian Gulf

Prior to the conflict, approximately 15 million barrels of crude oil and 5 million barrels of oil products transited the Persian Gulf daily, representing around 20% of global oil consumption, according to the International Energy Agency (IEA). The conflict has significantly disrupted this flow. Additionally, some oil-producing nations in the Middle East have halted production due to their inability to ship fuel from the Gulf, leading to full storage tanks. This has removed an estimated 10 million barrels per day from the market, the IEA reports.

Bottleneck at the Strait of Hormuz

The eight countries surrounding the Persian Gulf collectively hold about 50% of global oil reserves. Normally, these nations coordinate production to maintain price stability, with Saudi Arabia often increasing output to stabilize markets, explained Jim Krane, energy research fellow at Rice University’s Baker Institute. However, “all of that spare capacity is also bottled up inside the Persian Gulf right now and it can’t get to market either,” Krane said. “So the main emergency response system that we have is also blocked.” The IEA emphasizes that resuming transit through the Strait of Hormuz is crucial for restoring stable oil flows and reducing market strain.

Workarounds and Waivers

Some nations are attempting to circumvent the Gulf bottleneck. Saudi Arabia is utilizing its East-West pipeline, capable of transferring about 5 million barrels per day, but this pipeline was already operating at capacity. The U.S. also released approximately 140 million barrels of Iranian oil already in transit, but this simply expanded the pool of potential buyers rather than increasing overall supply, according to Daniel Sternoff, senior fellow at the Columbia Center on Global Energy Policy.

Waiving sanctions on Iranian oil, while intended to increase supply, could inadvertently benefit Iran by raising prices. Similarly, lifting sanctions on Russian oil could help clear stored barrels. Waiving the Jones Act to allow foreign ships to transport liquefied natural gas (LNG) from the Gulf Coast to New England is expected to have a limited impact on oil and gasoline prices, described as “helpful, but not a game changer” by Michael Lynch, distinguished fellow at Energy Policy Research Foundation.

Challenges to Increasing Production

While the U.S. is a net oil exporter, rapidly increasing production to offset the global shortfall is unrealistic. “If the U.S. were to try to make up the global shortfall, we would need to nearly double our production,” Barteau stated. “We couldn’t drill wells that fast even if we wanted to.” Increasing domestic production by even 1 million barrels per day, a feat achieved during the shale boom, would be difficult to replicate.

Refinery Limitations

Halting exports and utilizing more oil domestically wouldn’t necessarily lower gasoline prices. Global oil markets are interconnected, and U.S. refineries are largely configured to process heavy, sour crude, while much of U.S. production is light, sweet crude. Approximately 70% of U.S. refineries require heavy crude, and retooling them would be a costly and time-consuming process. As Michael Lynch noted, “A lot of it has to do with how long does this last ... if it goes on for another six weeks we get to be in some serious trouble.”