Trump faces escalating oil crisis over Iran blocking Strait of Hormuz

(WASHINGTON) -- President Donald Trump is facing an escalating crisis in the Strait of Hormuz, where roughly one-fifth of the world's oil supply remains caught in the crosshairs of the U.S. and Israeli war with Tehran.

Trump downplayed the virtual standstill in and near the vital shipping route, saying on Wednesday it was in "great shape."

But Iran's new supreme leader, Mojtaba Khamenei, in a purported first message since taking over for his father, vowed Thursday that his country will continue to block the strait as leverage and capitalize on Iran's economic weapon.

Attacks on shipping vessels have surged in the Persian Gulf this week, and oil prices jumped to more than $100 per barrel. In the U.S., gas prices rose to a national average of $3.59 a gallon, according to data from AAA.

The International Energy Agency said on Thursday the Middle East conflict is creating "the largest supply disruption in the history of the global oil market." Member countries of the IEA have said they will release 400 million barrels of oil from strategic reserves, a first such joint effort since Russia's invasion of Ukraine in 2022.

To deal with the economic and political fallout at home, President Trump will tap the Strategic Petroleum Reserve. Energy Secretary Chris Wright said his department's been authorized to release 172 million barrels from the reserve starting next week.

But analysts say those solutions are temporary, likely not enough oil in the long term to make up for the 20 million barrels that typically pass through the Strait of Hormuz each day.

Trump told Fox News's Brian Kilmeade in an interview earlier this week that ships holding at the Strait of Hormuz need to "show some guts" and push through the channel.

Trump on March 3 had announced the U.S. government was going to provide some risk insurance and guarantees after insurers canceled their coverage.

He also said that if necessary, the U.S. Navy would escort tankers through the strait, a potentially risky proposition.

But as of Thursday, Energy Secretary Wright said the U.S. Navy is "not ready" to escort oil tankers because of the military's current focus on striking Iran.

"It will happen relatively soon, but it can't happen now. We're simply not ready. All of our military assets right now are focused on destroying Iran's offensive capabilities and the manufacturing industry that supplies their offensive capabilities," Wright told CNBC.

When asked if the U.S. escorting of tankers could happen by the end of the month, Wright said, "I think that is quite likely the case."

White House spokesperson Anna Kelly, when asked about Wright's comments, told ABC News that Trump is "fully prepared to provide U.S. Navy escorts through the Strait of Hormuz if he deems it necessary. Our military has destroyed well over 20 inactive mine laying boats with more to come."

Earlier this week, Trump warned that if Iran disrupted the Strait of Hormuz with mines, "the Military consequences to Iran will be at a level never seen before."

Another potential avenue the White House said it is "considering" to mitigate the crisis is to waive the Jones Act, a century-old law that requires all goods shipped between U.S. ports be carried on U.S. owned-and-operated ships. 

"In the interest of national defense, the White House is considering waiving the Jones Act for a limited period of time to ensure vital energy products and agricultural necessities are flowing freely to U.S. ports. This action has not been finalized," White House press secretary Karoline Leavitt said in a statement Thursday. 

Trump, who could face political consequences of higher oil and gasoline prices in this year's midterm elections, on Thursday tried to spin the rising costs as good for the U.S. overall.

"The United States is the largest Oil Producer in the World, by far, so when oil prices go up, we make a lot of money," Trump wrote in a social media post.

"BUT, of far greater interest and importance to me, as President, is stoping an evil Empire, Iran, from having Nuclear Weapons, and destroying the Middle East and, indeed, the World," Trump added.

He did not comment on how expert say higher oil prices will hurt many companies and American consumers, although Wright, the energy secretary, insisted in an interview with Fox News that the individual consumer is Trump's main concern.

"Overall for the U.S. economy, this isn't bad news. But of course [what] President Trump is worried about is not overall, he is worried about every single American consumer. So yes, of course he is concerned about the rising energy prices through this short-term period that people have to suffer," Wright said. 

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