When President Donald Trump announced on Wednesday that he was ending America’s war on Iran and washing his hands of the disputed Strait of Hormuz, he invoked what he likes to call America’s “energy dominance”: The United States has become the world’s largest oil producer, and no longer needs to protect the Persian Gulf by force.
“The United States imports almost no oil through the Strait of Hormuz and will not take any in the future,” he announced. “We don’t need it.”
That’s news for the oil and gas industry. Trump is right: The flow of oil from the Persian Gulf to the United States is much smaller than it used to be. But no matter what he says, the industry is very aware of how important the oil still is. That is why CEOs have been urging Trump for weeks to end Iran’s involvement in the Gulf, which remains vital to the international market in which they operate.
And it’s another reason why it’s time to add Big Oil and national security to the list of long-term political and economic dynamics that Trump has successfully thrown into chaos.
The knock-on effects of the Iran war actually seem to have ended long ago when increased domestic oil and gas production meant US political leaders felt they could worry less about the energy-related risks of US military intervention – and energy executives didn’t have to worry about US foreign policy as a major risk to their businesses.
Instead, Trump’s war on Iran — not to mention his takeover of Venezuela — has brought energy and foreign policy back together, in unpredictable ways. And energy practitioners are very disturbing.
For the better part of the past two decades, leaders of both parties have argued that the shale boom, which brought US oil and gas to the world market, would end America’s dependence on foreign crude — and the military persecution of the Persian Gulf that has dominated US foreign policy and the Middle East since the 1970s.
The global supply glut that resulted, in part, from that growth, left the United States less exposed than Asia and Europe to price increases and led the Trump administration to highlight the US and Israeli attacks on Iran last month as a low risk, from an economic perspective.
But the US and Israeli attacks on Iran in March, and the retaliation that followed, made it clear that problems in the Persian Gulf still mean problems for energy flows around the world and for Big Oil (and Big Gas), whose investment calculations are being disrupted. It quickly set off a global energy crisis – and, thanks to the machinery of the US refinery industry, Americans were less insulated from higher prices in the US than the average consumer would expect.
Although high prices provide a financial cushion for oil and gas majors, the war has brought all kinds of uncertainty into their investment decisions, which dominated the conversation inCERAWeek industry conference in Houstonlast week, as my colleagues James Bikales and Ben Lefebvre reported. The war has brought concepts such as naval escorts, first used during the 1987-88 Iran-Iraq war, back into the public discourse. Energy officials have struggled to kill proposals — such as reinstating the crude oil export ban that former President Barack Obama and congressional Republicans lifted in 2015 — and have surprisingly made clear the military results they want to see, some sounding like Republicans from a different era.
“If you talk to the CEOs who are members of the (American Petroleum Institute), they also want to make sure that we finish the job in Iran. We can’t leave Iran in a situation where it can control the ocean with a drone that will fly into that ocean any day,” API president Mike Sommers, who served as chief of staff to former House Speaker John Boehner, said. he told POLITICO at CERAWeek.
It’s hard to name an industry more closely associated with U.S. foreign policy around the world — excluding defense, of course — than the oil and gas industry. When Franklin Roosevelt cut the first agreement with the Saudi kings to provide security in return for oil, Jimmy Carter in 1980.as part of the so-called Carter Doctrinehe was the first president to announce that the United States would put American troops at risk of denying control of the Persian Gulf to a foreign power. In the decades that followed, the U.S. military was deployed to secure the Strait of Hormuz and liberate oil-rich Kuwait from Saddam Hussein’s occupation forces. George W. Bush’s invasion of Iraq in 2003 had many reasons – but the need to ensure US dominance in the energy-rich region was certainly one of them.
Even at the height of the Biden administration’s efforts to revolutionize investments in wind and solar energy (winds that have now been halted or reversed by the Trump administration), oil was going nowhere. Officials on both sides argued that U.S. production would be constrained by energy shocks and costly military commitments. The United States has used its gas production heft to help Europe cope with the energy effects of Russia’s invasion of Ukraine and four years of war.
But the past two decades have seen a clear shift, says Meghan O’Sullivan, who was deputy national security adviser for Iraq and Afghanistan for two years under George W. Bush and now directs the Belfer Center for Science and International Affairs at Harvard’s Kennedy School.
“Energy had become less important – not because it stopped being important, but because mass changed the calculus,” he told me last week. “With the United States enjoying a boom in production and global markets providing a wide supply, policymakers should not think of energy as a necessary constraint on foreign policy, nor as a primary goal of it.”
As Trump’s National Security Strategy puts it at the end of 2025: “When this administration repeals or reduces restrictive energy policies and U.S. energy production increases, America’s historical rationale for focusing on the Middle East will diminish.”
Now, O’Sullivan says, the changes in Iran, the Trump administration’s takeover of Venezuela and the US embargo on Cuban oil show that energy interests are once again being used as both a tool and a target.
The Trump administration has done almost everything it can to roll back Biden- and Obama-era climate and environmental laws at home, but its actions when it comes to oil and gas abroad have been unpredictable — leaving oil and gas giants scrambling to keep up.
Take the Trump administration’s arrest of Venezuelan leader Nicolás Maduro in January: After the president urged American companies to invest in the oil-rich but troubled country, oil and gas executives were overwhelmed — with ExxonMobil CEO Darren Woods calling the country “unexplorable” for now.
That may change, because with the rapid domestic shale boom, oil and gas majors are looking overseas again — back to the Middle East, to the troubled production areas that are now thriving in Iraq and Libya. But “high geopolitical risk premiums in the region are not helping them,” Jason Bordoff, director of the Center for International Energy Policy at Columbia, and senior director of energy and climate change on Barack Obama’s National Security Council, told me.
In the near term, it remains unclear whether Trump will follow through on his threat to abandon the Strait of Hormuz — or whether he will direct the U.S. military to protect it, one way or the other.
What is clear? In a world where oil and gas are still king, the United States is not as “energy dominant” as it may seem. Regardless of who is in power.
