4 actions the US could take to calm the oil market's historic Iran-war-driven volatility

• Historic oil volatility continues to upend markets amid the US-Iran war.
• JPMorgan analysts examined measures the US could take to calm the oil market.
• Still, the Strait of Hormuz is the chief influence on how prices will behave, the analysts said.

Oil prices plunged after surging past $100 per barrel as President Donald Trump signaled the Iran war could end soon, but volatility has continued on Tuesday.

According to JPMorgan, there are a few things the US could do to quell the wild swings being seen in the oil market since the Iran war began earlier this month.

Brent Crude prices hovered at around $88 per barrel on Tuesday, down 11%, though they're still up sharply from pre-war levels around $70. This historic volatility has thrown markets into chaos, with stocks down and forecasts calling for a period of stagflation.

JPMorgan addressed the topic in a note on Tuesday, discussing the options the US has to ease the intense volatility in oil prices. Here's what the bank says can be done in the near term.

Release strategic petroleum reserves

The US is considering releasing oil from its strategic petroleum reserves, a move that other G7 countries are discussing. According to US Secretary of Energy Chris Wright, the coordinated effort would mean releasing 300 million to 400 million barrels at a pace of 1.2 million per day for participating countries.

However, JPMorgan doesn't see this as the most effective solution.

"While helpful, that pace would not materially ease a 16 mbd shortfall and would likely provide only initial relief while pre‑escalation cargoes are still arriving," the note said. "Once those shipments clear and new loadings fail to depart, a 1.2 mbd release would be insufficient to counter potential losses of roughly 12 mbd within two weeks."

Impose export restrictions

JPMorgan analysts see the International Emergency Economic Powers Act (IEEPA) as likely the most direct way for President Trump to try to tame oil prices. It gives a US president the power to restrict crude oil and other refined product exports during a national emergency.

It might not necessarily be the best long-term solution, though, the bank said.

"In the short term, restricting US exports of crude and refined products would likely push domestic oil prices lower by trapping supply in the US, but over the longer term it would discourage production and tighten global markets, ultimately putting upward pressure on both global and US fuel prices."

Lift the Jones Act

This little-known law could provide a potential solution to the oil price problem. However, that doesn't mean its without it's complications.

Passed in 1920, it requires that all goods transported between US ports be carried by domestically built ships. The president can temporarily waive it, which might lower domestic shipping costs, but, as JPMorgan highlights, simply lifting the law may not have much impact.

"Combining a release from the SPR with a temporary waiver of the Jones Act would make the policy more effective," analysts stated. "Without a waiver, limited US-flagged tanker capacity could constrain how fast SPR barrels reach key refining centers or deficit regions."

Waive federal fuel taxes

JPMorgan also highlighted the relief the government could provide to consumers by waiving taxes on diesel and gasoline. The analysts don't see this as an easy fix, as it would require action from Congress, but they noted that states could pursue the option more easily.

"In limited circumstances, the executive branch can provide temporary administrative relief," they said. "However, a nationwide, long‑term waiver of the federal gasoline or diesel tax would almost certainly require new legislation from Congress."

One Caveat: The Strait of Hormuz is the biggest factor

Above all, JPMorgan made clear that unless the Strait of Hormuz is reopened, most policy actions are unlikely to be effective, and it's still not clear what could happen next in the war.

The Strait is a critical chokepoint for global oil flows, and it has quickly become one of Iran's most strategic assets in the war. Analysts said that so far, US actions haven't been sufficient to restore access to the shipping route.

"There is still no announcement from the US Navy or US Central Command (CENTCOM) that the Strait is open for safe passage, and there is no evidence of mine-clearing or other convoy planning," the JPMorgan team said.