Trump is scrambling to quell the rise of $100 oil. But the market keeps circling one answer.

By Myra P. Saefong

 Other efforts to coax oil down prices - now at $100 a barrel - are like putting a Band-Aid on a shotgun wound, says analyst 

 The Strait of Hormuz is now at the center of the world. 

 Oil prices have vaulted past $100 a barrel after weeks of intensifying tensions with Iran, setting off a scramble in Washington and across global energy markets to contain the surge. 

 But traders and analysts say the market keeps coming back to the same conclusion: None of the usual mechanisms for pushing prices lower will matter unless one critical problem is resolved. 

 Such a breathtaking move for crude (CL.1) (BRN00) in such a short span reflects just how jittery energy markets remain, despite efforts by the U.S. and global energy ministers to calm fears that the Strait of Hormuz, a vital artery for global trade, could remain effectively closed for a protracted time. 

 Read: Oil tops $100 again as Iran ramps up strikes and new leader vows to keep blocking Strait of Hormuz 

 There is only one clear solution, energy experts say. 

 'There's no replacement for 20 million barrels a day being shut in at the Strait of Hormuz.'Robert Yawger, Mizuho Securities USA 

 Every other effort to tamp down prices "has been ineffective because the Strait of Hormuz and its importance to the global economy is overwhelming," Robert Yawger, director of energy futures at Mizuho Securities USA, told MarketWatch. 

 The strait is "not replaceable by stopgap measures," like this week's historic release of emergency oil reserves by nations in the International Energy Agency or the Trump administration's consideration of a waiver of the Jones Act, said Yawger. "There's no replacement for 20 million barrels a day being shut in at the Strait of Hormuz." 

 Proposed solutions 

 The U.S. is considering issuing a waiver to a century-old law known as the Jones Act, a law mandating that only U.S.-made ships may transport cargo between domestic ports. A waiver would allow foreign ships to carry fuel to refineries on the East Coast. 

 Read: Trump's next move to stop oil's surge may involve a shipping law from 1920 

 This comes on the heels of the IEA's agreement to release 400 million barrels of oil (CL00) from emergency reserves, the largest such release ever. As part of that, the U.S. authorized the Department of Energy to unleash 172 million barrels from the nation's Strategic Petroleum Reserve. 

 Read: Trump is tapping America's Strategic Petroleum Reserve to fight rising gasoline prices. How much oil is left in it now? 

 The conflict in the Middle East "is creating the largest supply disruption in the history of the global oil market," the IEA said Thursday in a monthly oil report. 

 Disruptions and threats 

 Disruptions to the flow of global crude have been ongoing, including Iranian attacks on vessels in the Persian Gulf over the past few days. Oman was forced to evacuate all ships from its main export ?terminal at Mina ?Al ?Fahal, and two tankers were struck off the coast of Iraq, forcing its terminals to suspend operations, according to a Bloomberg report on Thursday. 

 Iranian-backed Houthis in Yemen, along with other so-called resistance groups, also are on alert and may joint Tehran's fight against the U.S. and its partners in the Middle East, the Wall Street Journal reported Thursday, citing Iran's semi-official Fars News Agency. 

 The Fars News Agency reportedly said that the involvement of the militia groups could lead to the closure of the Bab el-Mandeb Strait, which controls traffic for sea vessels accessing the Suez Canal via the Red Sea. 

 The Bab el-Mandeb Strait connects the Red Sea with the Gulf of Aden. 

 The Bab el-Mandeb Strait isn't quite as important at the Strait of Hormuz, but it is the fourth-largest maritime chokepoint for oil.  Around 4.2 million barrels per day of crude oil and petroleum liquids were transported through the strait in the first half of 2025, according to data from the U.S. Energy Information Administration. 

 Yawger said the strait may be already effectively shut down due to fears of Houthi attacks. If the threats were to come to fruition, say a Houthi attack on a very large crude carrier trying to transit through the Arabian Sea, he estimates that could potentially be a $10- to $15-barrel event - suggesting that it would lift oil prices by around that amount. 

 "That would eliminate that route as a potential exit point for Saudi crude oil," said Yawger. 

 Backwardation 

 Many other things still can go wrong in this conflict, and that's a reason why prices have climbed so fast. Yet "backwardation" in oil futures prices - a situation where current prices are higher than prices for contracts for future delivery - suggest "acute short-term supply stress, but not long-term shortage expectations," Frank Walbaum, market analyst at fintech company Naga.com, which offers online trading. 

 The flare-up in tensions in the Middle East "triggered a shift in the oil futures curve, with nearby contracts rising far more than longer-dated ones," he explained. 

 The April West Texas Intermediate crude contract (CLJ26) settled Thursday at $95.72 a barrel. That's around $20 higher than the $75.17 settlement for the December contract (CLZ26). 

 Oil futures that expire a month from now reflect expectations of easing crude prices. 

 The wide spread suggests that investors are betting that the current supply disruption "will not have a meaningful lasting impact on the oil market and crude prices," said Roukaya Ibrahim, chief commodity strategist at BCA Research. One reason may be that investors believe the disruption will be "short-lived and that transit through the Strait of Hormuz will soon be restored." How that might happen is anyone's guess. 

 "As long as the Strait of Hormuz remains closed" any policies such as strategic oil-reserve releases or granting Jones Act waivers are "only a short-term fix, like putting a Band-Aid on a shotgun wound," said Denton Cinquegrana, chief oil analyst at OPIS, a unit of Dow Jones, the publisher of MarketWatch. 

 "While there have been efforts to stem the high prices, they have largely been ineffective," he told MarketWatch. "The longer it takes to reopen [the Strait of Hormuz] the longer the recovery" time for the oil market. 

 -Myra P. Saefong 

 This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 

(END) Dow Jones Newswires

03-12-26 1850ET

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