Trump extends Jones Act waiver as Iran war roils oil market

The Trump administration on Monday narrowed its waiver of the Jones Act while extending it for another 90 days, leaving in place fewer U.S. shipping restrictions in an effort to keep fuel flowing amid the Iran war.

President Donald Trump’s second extension of the waiver comes as the war continues to create economic turmoil through the disruption of global oil markets, just a few months before inflation-weary Americans head to vote in the midterm elections.

After the Trump administration’s latest signals of a deal to reopen the Strait of Hormuz failed to materialize, oil prices have resumed their climb while U.S. petroleum reserves have fallen to their lowest level in decades.

Trump issued his first 60-day waiver of the Jones Act on March 17, less than three weeks after the U.S. and Israel started the war by launching heavy strikes on Iran. The Trump administration extended the waiver in mid-May for another 90 days. The newest 90-day extension should last until mid-November, past the date of the midterms.

The latest extension, however, will be narrowed to apply only to vessels hauling certain energy resources, a White House official told CNBC. The extension will also require the Pentagon to consult with the U.S. Maritime Administration and determine if the waiver applies to each individual shipping voyage, the official said.

The new limitations were added to address concerns by the U.S. maritime industry, according to the official.

“We commend the administration’s leadership in extending the Jones Act waivers, a critical action that will keep American energy moving, strengthen supply security and help protect consumers from unnecessary price volatility,” said Kristin Whitman, senior vice president of government relations at the American Petroleum Institute, in a statement.

“This decisive step will ensure critical fuels reach the regions that need them most while reinforcing America’s resilience amid ongoing global market disruptions,” said Whitman.

The Jones Act is a 1920 law requiring that the transport of goods between American ports be conducted by U.S. vessels.

It was intended as an effort to grow the domestic shipping industry after World War I. But some economists, including those at the libertarian CATO Institute, argue the Jones Act is an outdated form of protectionism.

Since Trump first waived the law, 210 voyages have been completed that otherwise would have been deemed unlawful, according to Maritime Administration data. The majority of these vessels were hauling gasoline and crude oil. CATO, citing that data, calculates that nearly 55 million barrels of cargo in total have been shipped by utilizing the waivers.

White House spokeswoman Taylor Rogers said the Trump administration took the step “to ensure our military and key industries maintain uninterrupted…