Members are advised to note the recent announcement by the White House to suspend the Jones Act for 60 days, in an attempt to bring down oil prices and ease the costs of transporting oil, gas and other commodities within the U.S., amid the Middle East conflict. This waiver allows foreign-flagged vessels to transport goods between U.S. ports for the next 60 days, with the aim to facilitate the movement of energy supplies and notably high demand fertilisers across the country.

The waiver has not yet been published but appears to be based on 46 U.S. Code § 501(a), which requires a finding by the U.S. Secretary of Defense that it is “necessary in the interest of national defense to address an immediate adverse effect on military operations.”
There have been mixed reactions to the announcement, and some analysts and industry bodies are questioning whether the waiver satisfies the national defense requirements, and whether it will have the intended effect of reducing U.S. oil prices, among other reasons, due to:

(i) only a small percentage of the U.S. oil supply carried on Jones Act vessels;

(ii) many U.S. Jones Act tankers are on long-term charter parties under which the customers (e.g., refineries) will have to continue to pay for these vessels despite the waiver; and

(iii) the current lack of foreign-flagged oceangoing tankers and elevated freight rates in the international tanker market due to the Strait of Hormuz crisis.