US weighs suspending century-old Jones Act to curb oil price surge

The United States (U.S.) government is planning to suspend the 1920 Jones Act in a bid to tame the surging oil prices amid the closure of the Strait of Hormuz, a critical passage through which much of the world’s oil supply passes.

According to people familiar with the matter, who were not authorised to discuss the development in public, the Trump administration is planning to issue a 30-day waiver for the centuries-old oil maritime law.

According to the official document available at the U.S. Customs and Border Protection website, the Jones Act, part of the Merchant Marine Act of 1920, provides that the transportation of merchandise between U.S. coastwise points, either directly or via a foreign port, is reserved for U.S.-built, owned, and documented vessels.

In simpler terms, it states that only U.S.-built ships are authorized for transportation of goods between U.S. ports.

Its suspension will allow foreign vessels to help supply fuel to the East Coast from the Gulf Coast and elsewhere in the U.S.

The development comes amid surging oil prices after Iran closed the Strait of Hormuz following the U.S.-Israel joint military strikes. 

Iran has retaliated with missile strikes against Israel and the U.S. bases in the Middle East.

The closure of the key oil trade route has already had several impacts on global oil trade and economy. 

Earlier, the International Energy Agency (IEA) announced the historic release of 400 million barrels of oil from its strategic reserves to address the shortage caused by supply disruptions.