Energy Prices Rise Following Trumps Suspension of the Jones Act

US Shipping Costs Rise by Over 10% Amid Ongoing Conflict

Shipping costs in the US have increased by more than 10 percent over the past month due to the ongoing conflict between the US and Iran. The increase is attributed to a maritime law, the Jones Act, which restricts foreign-flagged vessels from transporting goods between US ports.

On March 18, President Donald Trump issued a 60-day waiver for the Jones Act, allowing foreign-flagged vessels to transport goods through the Strait of Hormuz, a key waterway that carries approximately 20 percent of global oil and liquefied natural gas supplies. The waiver was intended to lower energy costs by increasing the availability of tankers.

However, despite the waiver, shipping costs have continued to rise. According to experts, the impact of the waiver on oil prices has been minimal, with estimates suggesting a small increase of 3 cents on the East Coast and potentially more on the Gulf Coast. The rise in oil prices is largely overshadowed by the ongoing conflict, which has disrupted transit through the Strait of Hormuz.

The US Navy has imposed a blockade of Iranian ports to prevent the movement of oil to and from Iran, further exacerbating the situation. As a result, shippers have adapted their routes, with over 34,000 ships diverting from the strait over the past month. The Containerized Freight Index, which tracks shipping container costs, has jumped more than 10 percent in the past month.

Several major vessel insurers have also cancelled war risk coverage for ships traveling through the Strait of Hormuz, citing increased risks due to the conflict. Despite the availability of new insurance options at a higher cost, experts predict that fuel prices will not normalize until traffic through the strait returns to pre-war levels.

Source: Al Jazeera