The near-complete stoppage of traffic through the Strait of Hormuz — the chokepoint that normally carries roughly one-fifth of the world’s oil and liquefied natural gas — has shattered global supply balances. Crude oil prices have jumped above $110 a barrel and U.S. pump prices have followed, but policymakers have only limited tools to offset the shock, and none replace the lost volume quickly.
Spare production capacity exists, but it’s largely stranded. Countries such as Saudi Arabia and the United Arab Emirates can produce more without drilling new wells, but most of that extra oil sits on the Persian Gulf side of Hormuz. If tankers can’t pass through the strait, that capacity is effectively trapped. Spare barrels are only useful if they can reach buyers.
Some crude can travel alternative routes: pipelines to the Red Sea or shipments through the Suez Canal and Mediterranean. Still, pipeline throughput is limited. Industry estimates put the total volume affected by the disruption at about 20 million barrels per day; roughly 5 million barrels are finding ways around the strait, leaving an estimated shortfall near 15 million barrels daily — a gap on the order of a country’s entire oil output.
Strategic reserves are being tapped. The International Energy Agency’s 32 member countries announced the largest coordinated release in history, totaling more than 400 million barrels. But moving government stockpiles into markets takes time. Sales, loading, and shipping are constrained by terminals, pipelines and tanker availability. Analysts estimate burned reserves can add roughly 2 million barrels per day to markets in the near term — helpful, but far below the tens-of-millions-per-day hole created at Hormuz.
Other steps buy only marginal relief. The temporary waiver of the Jones Act eases domestic transfers of gasoline and can shave cents off regional pump prices by improving distribution, but it doesn’t add significant global supply. Loosening sanctions — allowing more Russian crude to move to nontraditional buyers or even, in extreme discussion, waiving restrictions on Iranian oil — can supply perhaps around a million barrels per day as a short-term logistical buffer, but these are politically charged and still small relative to the gap.
Proposals to ban U.S. oil exports to keep crude at home also have limits: U.S. output is mostly light, sweet crude, while many domestic refineries are configured for heavier imported grades. Blocking exports would create mismatches and inefficiencies rather than a straightforward price cure.
State-level gasoline tax holidays can temporarily lower what drivers pay at the pump, but if many jurisdictions cut taxes simultaneously they can stimulate demand and blunt or reverse any price benefit. Similarly, the EPA could relax requirements for more expensive “summer” gasoline blends and allow cheaper winter blends in some areas, potentially saving roughly 10 to 30 cents per gallon — at the cost of higher emissions and worse air quality.
Bottom line: a mix of reserve releases, rerouted shipments, regulatory adjustments and distribution tweaks can blunt price spikes and buy time, but they cannot quickly replace roughly 15 million barrels per day blocked at the Strait of Hormuz. Restoring safe passage through the strait — or otherwise returning that volume to global markets — is the most direct and effective way to bring prices down materially.