White House weighs 3rd Jones Act waiver as Iran tensions lift oil to $80

The White House weighs a third Jones Act waiver extension to ease shipping bottlenecks and cap crude near $80 as Iran tensions threaten Hormuz supply.

The White House is considering a third extension of the Jones Act waiver — potentially with new geographic restrictions — to boost domestic shipping capacity and contain crude oil prices near $80 a barrel as US-Iran tensions escalate.

"The administration is evaluating whether continued relief is necessary to prevent supply bottlenecks from pushing fuel prices higher," a White House official said, speaking on condition of anonymity because the deliberations are private.

WTI crude traded at $71.85 a barrel Thursday, down 2.3% on the day but still well above pre-conflict levels. Brent crude settled at $76.10. The national average for regular gasoline stood at $3.85 a gallon, according to AAA, down from a conflict-era peak of $4.56 but still more than 80 cents above the average before hostilities began in February.

The decision, expected by the end of July, pits the White House's goal of containing energy costs against opposition from domestic shipping interests and Republican lawmakers who argue that prolonged reliance on foreign vessels undermines national security. Failure to extend the waiver could tighten fuel supply further, while an extension risks inflaming political tensions ahead of the midterm elections.

A Century-Old Law Meets a Modern Crisis

The Jones Act, formally the Merchant Marine Act of 1920, requires goods transported between US ports to be carried on American-built, American-owned ships crewed by American sailors. The Trump administration first suspended the law for 60 days on March 18, citing the de facto closure of the Strait of Hormuz after Iran-linked attacks on commercial tankers. The initial waiver allowed foreign-flagged vessels to transport oil, gas, fertilizer and coal between US ports, a move the White House said helped avert regional fuel shortages. It extended the waiver by 90 days on April 24, pushing the expiration to Aug. 16.

The deliberations come as US-Iran hostilities continue to disrupt energy markets. Iran has maintained that its oil exports are continuing despite the cancellation of US waivers on July 7, while the Islamic Revolutionary Guard Corps has persisted with attacks on commercial shipping in the Strait of Hormuz. US oil refiners have been among the biggest beneficiaries of the supply disruption. Refining margins have surged to approximately $40 a barrel, more than triple pre-conflict levels, boosting shares of Marathon Petroleum and Valero Energy. The last time the US faced a comparable supply disruption was during the 2019 Abqaiq-Khurais attacks, which knocked out 5.7 million barrels a day of Saudi production and sent crude prices surging 15% in a single session.

Political Pushback and Market Stakes

The waiver has drawn sharp criticism from US shipping interests. House Speaker Mike Johnson, a Louisiana Republican, has publicly called for ending the exemption, arguing that reliance on foreign-flagged vessels erodes the domestic maritime industrial base. The American Maritime Partnership, an industry group, has warned that each month of waiver extension weakens the US-flagged fleet's readiness for military sealift operations.

One option under consideration would limit the waiver to specific regions, such as the East Coast or Gulf Coast, rather than applying it nationwide. That approach could address concerns from Gulf Coast shipping operators while still providing relief to regions most dependent on imported fuel.

The Strategic Petroleum Reserve has been drawn down to its lowest level since 1983 after the administration released crude to stabilize markets earlier this year. If the waiver expires without renewal, analysts expect domestic transportation bottlenecks to widen regional price differentials, particularly along the East Coast, which relies heavily on Jones Act-compliant tanker capacity for refined product deliveries. The broader equity market has largely shrugged off the energy supply concerns, with the S&P 500 rising 0.8% on Thursday as tech stocks rallied. But the energy sector underperformed, falling 1.1%, as investors weighed the risk that prolonged high fuel costs could dampen consumer spending.

This article is for informational purposes only and does not constitute investment advice.