The ongoing tensions between the United States and Iran continue to pose threats, with Washington potentially taking further action to suppress oil prices. The White House is reportedly considering another extension to the waiver on the "Jones Act" shipping restrictions.
According to reports, one option currently under discussion by the administration would continue to allow foreign-flagged vessels to transport cargo between U.S. domestic ports. However, this extension might come with added geographical restrictions, limiting its applicability to specific regions. In April, the Trump administration already extended the Jones Act waiver by 90 days, pushing its expiration to August 16th.
As U.S.-Iran conflict escalates anew and international oil prices hover near $80 per barrel, the U.S. government is contemplating the continued use of a highly contentious policy tool: relaxing the century-old Jones Act.
Reports from Wednesday indicate the White House is studying a further extension of the Jones Act waiver and discussing the possibility of attaching regional limitations. This move aims to strike a balance between easing energy supply constraints and addressing opposition from the domestic shipping industry. The current waiver is set to expire on August 16th, with a final decision expected before the end of this month.
This represents the latest effort by the administration this year to control energy prices. Against the backdrop of persistent tensions in the Strait of Hormuz, renewed U.S. pressure on Iran, and rebounding international oil prices, the White House is attempting to increase domestic maritime shipping capacity to prevent transportation bottlenecks from further driving up gasoline and diesel prices.
Potential New Extension May Include Regional Limits
Citing two informed sources, Reuters reported that the White House convened meetings this week with officials from the Departments of Energy, Transportation, and the Interior to discuss whether to continue the Jones Act waiver.
Sources stated that one of the options under consideration is to continue permitting foreign-flagged vessels to engage in cargo transport between U.S. ports. However, this could be accompanied by new geographical restrictions, applying only to specific areas, thereby reducing political pressure from the U.S. shipping industry and Republican lawmakers.
A White House official indicated that no final decision has been made yet. The official noted that President Trump's initial decision to waive the Jones Act helped avert nationwide supply chain shortages, and the administration continues to evaluate the policy's effectiveness.
Reports suggest that with U.S. domestic crude oil prices around $80 per barrel, controlling energy costs remains a key policy objective for the White House.
Beyond relaxing the Jones Act, the administration has previously tapped the Strategic Petroleum Reserve (SPR) to release crude into the market. The U.S. SPR inventory is now at one of its lowest levels since 1983.
What is the Jones Act?
The Jones Act, formally known as the Merchant Marine Act of 1920, is a century-old U.S. maritime protection law.
The Act mandates that cargo transported between U.S. ports must use vessels that are: built in the United States; owned by U.S. citizens; and crewed by U.S. seafarers.
Long supported by the U.S. shipping and shipbuilding industries, the law is viewed as crucial for national security and protecting the domestic maritime sector. However, the energy industry argues it restricts shipping capacity and raises domestic transportation costs, especially during periods of tight energy supply.
Consequently, the U.S. government typically grants temporary Jones Act waivers only during major natural disasters or states of national emergency.
U.S. First Waived 'Ship Ban' in March, Extended for 90 Days in April to Curb Prices
If approved, this would mark the second extension of the Jones Act waiver by the administration this year.
In March, amid global energy supply concerns triggered by the Strait of Hormuz crisis, the U.S. government first announced a 60-day Jones Act waiver. This move aimed to increase transport capacity, ease supply chain pressures, and curb rising energy prices.
In April, the administration extended this waiver, pushing the expiration date to August 16th.
Shipping Industry and Republicans Maintain Opposition
However, this policy has been controversial since its introduction.
The White House believes allowing foreign vessels to participate in U.S. coastal shipping can quickly increase capacity and improve the flow of critical commodities like oil, fuel, and fertilizer between American ports, thereby alleviating supply tightness.
U.S. shipping and shipbuilding companies, however, argue the policy undermines the competitiveness of the domestic shipping industry and could harm national security.
Reports indicate that some Republican lawmakers, including House Speaker Mike Johnson, have publicly urged the administration to end the waiver this month. They argue that long-term reliance on foreign vessels for transport would weaken the U.S. maritime industrial base.
Now, with renewed tensions in the Middle East and the energy market facing supply risks once more, the White House finds itself at a crossroads between controlling oil prices and protecting the domestic shipping industry. The decision on whether to grant a third Jones Act waiver extension will serve as a key indicator of the administration's energy policy direction.
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