Jones Act Waiver Extended, Survey Sees Hormuz Disruption Lasting

The White House has extended a key shipping waiver for 90 days, allowing foreign vessels to move energy commodities between U.S. ports through mid-August, according to Rigzone. The move is part of the Trump administration's efforts to counter supply disruptions tied to the war with Iran, which has closed the Strait of Hormuz.

The waiver, initially set to expire May 17, temporarily suspends Jones Act restrictions for transporting coal, crude oil, refined products, natural gas, and fertilizer. A White House official said the extension, announced three weeks before expiration, provides certainty and allows the maritime industry to ensure sufficient vessel availability. The waiver has already been used for shipments of renewable diesel, crude oil, ammonia, ethanol, and gasoline to states including California, Florida, Pennsylvania, and South Carolina.

The extension comes as a new Dallas Fed Energy Survey update reveals oil and gas executives expect the critical Strait of Hormuz disruption to last for months. According to the survey, 39 percent of 99 responding executives expect a return to normal traffic by August, while 26 percent see it happening by November and 14 percent expect it even later. Only 20 percent anticipate a return to normal by May.

Furthermore, executives foresee lasting impacts on shipping costs. When asked how much the cost of shipping oil from the Persian Gulf will increase once the conflict ends, the most common response from 70 executives was an increase of "more than $2 but not more than $4" per barrel. A significant portion of respondents also selected increases of "more than $6" and "more than $4 but not more than $6." A majority of executives also believe future disruptions are likely, with 48 percent saying it is "very likely" the strait will be disrupted again within five years.

The prolonged closure is reshaping oil price assumptions. SEB analyst Ole R. Hvalbye noted in a report that market stability in April rested on an assumption the strait would reopen around May 1, an assumption that is "now slowly falling apart." He warned that every week of delay beyond May 1 theoretically adds around $5 per barrel to the rest-of-year average for Brent crude. Brent front-month prices were at $106.3 per barrel on the morning of April 24, a $9 jump from the week's open.

The closure has pulled an estimated 13 million barrels per day of crude and refined supplies from the global market. For Bakken operators, the extended domestic shipping waiver provides continued flexibility for moving crude to coastal refineries, while the sustained global supply disruption and associated price volatility underscore the ongoing geopolitical risk premium embedded in the market.