A Stormy Sea of Oil
16 MAR, 2026
By Alexis Bienvenu
By Alexis Bienvenu, Fund Manager at La Financière de l'Échiquier (LFDE)
The United States is swimming in oil. In fact, the country is by far the world’s leading oil producer: including all petroleum products, it produced more than 21 million barrels per day in 2023, of which 12 million barrels were crude oil, compared with around 10 million barrels each for the second- and third-largest producers, Saudi Arabia and Russia.[1] That represents more than 20% of global production, and the trend is still rising. In addition, the country is one of the world’s leading exporters of refined petroleum products, with more than 6 million barrels per day across all categories.
However, the blockade of the Strait of Hormuz since the start of the U.S. and Israeli offensive against Iran at the end of February has led to a sharp increase in gasoline prices in the United States: +20% as of March 13. Gasoline now costs $3.6 per gallon, or just under $1 per liter, approaching its 2023 and 2024 highs, although it remains far from the $5 per gallon peak reached in 2022.
How can this paradox be explained? In reality, although the United States is awash in oil, its consumption remains substantially dependent on foreign imports, because domestic crude does not match the requirements of local refineries and distribution networks. Local production mainly consists of light, low-sulfur crude, while refineries were built decades ago to process heavier, high-sulfur oil. As a result, the country must import a different type of crude than the one it produces domestically.
Moreover, refineries and strategic reserves—located mainly in the Midwest and around the Gulf of Mexico (or the “Gulf of America,” in Trumpian language)—are far from the main consumption centers. The East and West Coasts, which consume most of the fuel, are heavily equipped with terminals designed to receive foreign oil shipments. Finally, a 1920 law, the Jones Act, stipulates that cargo transported between two U.S. ports must be carried on ships built, owned, and operated by Americans, limiting competition and making domestic transport significantly more expensive.
The result is a mismatch between oil production and consumption, which hurts consumers but benefits producers. Oil companies profit from rising global oil prices while their production costs remain unchanged. As a result, the MSCI USA Energy index has surged 28% since the start of the year, while the broader S&P 500 index has fallen 2% as of March 12.
Faced with this pressure on the American consumer—who will soon express it as a voter in the midterm elections next November—the head of state, ultimately responsible for this price spiral, cannot remain idle. In an unusual move, the president is considering temporarily suspending the Jones Act. He has also agreed to release 172 million barrels from strategic reserves, as part of a coordinated global action through the International Energy Agency, although those supplies will take time to reach the market.
The administration has also authorized other countries to purchase Russian crude stored in tankers and is studying the possibility of suspending the federal gasoline tax, which brings in 18 cents per gallon (around 5 cents per liter) but remains crucial for U.S. public finances.
Many other ways to intervene in gasoline prices could be imagined, and the president—known as a deal maker—will likely not lack creativity in this regard. Yet the reality remains that, regardless of the measures introduced to soften the blow, around 20% of the world’s oil supply will remain effectively absent as long as the Strait of Hormuz is blocked. The same applies to part of the supply of gas and fertilizers, essential products for industry and agriculture, respectively.
In this stalemate, either negotiations begin and the strait becomes navigable again—though in exchange for what political concessions?—or the United States attempts to control the passage militarily, which would trigger shockwaves. In all cases, significant political, diplomatic, and financial costs are inevitable—costs the United States may have underestimated.
The time has come for the famous “art of the deal” to come into play—something that, for now, has been noticeably absent—so that Trump, in turn, might succeed in parting the waters of this turbulent sea.
[1] Fuente: Energy Information Administration - https://www.eia.gov/tools/faqs/faq.php?id=709&t=6
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