The U.S. Navy is not ready to escort oil tankers through the Strait of Hormuz, Energy Secretary Chris Wright told CNBC in an interview Thursday.
“It’ll happen relatively soon but it can’t happen now,” Wright said. “We’re simply not ready. All of our military assets right now are focused on destroying Iran’s offensive capabilities and the manufacturing industry that supplies their offensive capabilities.”
Wright said it is likely that the Navy will be in a position to escort tankers by the end of this month. “I’ll be over at the Pentagon later today — that is what the military is working on,” the Energy secretary told CNBC’s “Squawk Box.”
Brent oil prices, the international benchmark, touched $100 per barrel earlier Thursday as attacks on commercial vessels in the Persian Gulf continue this week. Brent was last trading about 7% higher at $98.64.
Wright’s comments come after a post on his social media account wrongly claimed on Tuesday that the Navy had escorted a tanker through the Strait. The post was quickly deleted from his account, but it sent oil prices plunging more than 17% at their lows Tuesday.
President Donald Trump promised on March 3 that “the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.”
Tanker traffic through the Strait remains at a standstill as ship owners fear attacks by Iran. The closure of the Strait has triggered the largest oil supply disruption in history, according to analyses from consulting firms Rapidan Energy and Wood Mackenzie.
It is the only entry and exit route in the Persian Gulf. About 20% of global petroleum consumption passed through the narrow waterway before the war.
More than 30 countries agreed Wednesday to inject 400 million oil barrels from their stockpiles into the market in an effort to address the massive disruption. The U.S. will release 172 million barrels from the Strategic Petroleum Reserve as part of that effort.
It is the largest release of emergency stockpiles in history, but the action has failed to calm the oil market. It remains unclear how long the war will last and when oil and gas flows through the Strait will return to normal. The Trump administration has sought to reassure the market that war will end soon.
“This is an operation that will take weeks, not months,” Wright told CNBC.
But Iran has rejected U.S. calls to surrender, warning that it aims to spike oil prices to $200 per barrel.
[/gpt3]
