Trump’s ambition to control the oil market highlights the lack of an alternative to the Strait of Hormuz

Through U.S. military operations in Venezuela and Iran, Donald Trump sought to control oil production in both countries and, presumably, establish himself as an arbiter of global output and prices, and as someone capable of dictating supply to his competitors. The oil blockade of Venezuela and the attempt to remove Maduro from Caracas achieved their objectives, but in Iran, regime change has not been replicated, and this failure has highlighted something Trump had not anticipated: the vulnerability of the Strait of Hormuz due to the lack of an alternative route for exporting hydrocarbons from the Persian Gulf. Trump has discovered that he does not hold all the cards, as he perhaps thought.

President Trump sought to reshape the global status quo through intervention in Venezuela and the escalation toward war with Iran. Nevertheless, the impact of U.S. foreign policy is not limited to geopolitics. Both events have been explicitly driven by, and have significantly influenced, the international economic situation—particularly the oil and hydrocarbons market. The effects of this are already being felt across the world, with seemingly uninvolved countries like Vietnam and South Korea already implementing measures to protect their domestic economies from the fallout of the emerging oil crisis. The consequences of the conflict in the Middle East—which is directly affecting a geographic chokepoint through which approximately 20% of global oil passes daily—could very easily disrupt the global economy in the long term, especially if the parties involved continue to rely on attacks and disruptions to energy infrastructure as a core part of their strategy.

The OPEC Reference Basket, a weighted average of benchmark crude oil prices produced by OPEC member countries, saw a slight increase in the price per barrel in February following Trump’s intervention in Venezuela, and a very sharp spike in March due to the ongoing conflict in the Persian Gulf: the basket price jumped to a high of $146.05 that month. The situation continues to evolve and remains highly volatile, but it is possible to draw some conclusions and make predictions about the international energy market—and, by extension, global economic stability—based on the events that have already unfolded in both Venezuela and Iran.

Venezuela

On January 3, the Trump administration launched a military operation that removed the government of Nicolás Maduro and installed a cooperative administration led by Delcy Rodríguez. From the outset, the U.S. administration made it clear that part of the strategic rationale behind its actions is to control Venezuela’s significant but outdated oil industry and use it to achieve both domestic and international economic and political goals. Specifically, to lower domestic oil prices to $50 per barrel and exert economic pressure on energy markets in favor of American interests and to the detriment of hostile states such as Cuba and Iran, thereby influencing the geopolitical calculations of Russia and China.

As such, one of the first actions of the Trump administration has been to “negotiate” with the new interim government for access for U.S. companies and investment in the Venezuelan oil market, as well as U.S. “oversight” over policy and export revenues. This intervention in Venezuela’s oil economy is carried out through the US Treasury’s Office of Foreign Assets Control, which has issued a series of “general licenses” allowing US firms to market Venezuelan oil internationally, import goods and services necessary for oil extraction into Venezuela, and invest in new and existing oil and gas infrastructure in Venezuela.

While the Trump administration states that the sale of this oil must be conducted on “commercially reasonable terms” in the international market, and that the proceeds from these sales—which will be deposited into a U.S.-managed account—will be “spent transparently and for the benefit of the Venezuelan people,” this economic plan appears quite clearly to serve primarily U.S. interests. Strategically, Venezuela’s vast reserves of underutilized oil could serve as a means to counteract the medium- and long-term consequences of the supply contraction in the U.S. and international markets caused by the ongoing conflict in the Persian Gulf. This already appears to be part of the U.S. administration’s plan, as on March 18 the U.S. Treasury further eased sanctions on Venezuelan oil and authorized PDVSA to sell oil directly to the U.S. market, and Trump announced a 60-day suspension of the Jones Act to facilitate oil imports into the U.S.

Nevertheless, the reality of oil and gas extraction, processing, and export is that it is a process requiring substantial investment in specialized infrastructure and technical expertise, which take a long time to develop and become economically viable. As such, control over Venezuela’s oil has had little to no effect in mitigating the shock and immediate short-term effects of the war in the Persian Gulf.

Middle East

The conflict in the Persian Gulf has had catastrophic consequences for the global oil and gas markets because it not only directly affects some of the world’s largest oil and gas producers, but has also actively disrupted and blocked the Strait of Hormuz, which is the main trade route through which these countries export their energy production to the global market.

To illustrate the significance of the situation, Saudi Arabia is the world’s largest producer of crude oil, generating $187 billion in revenue from crude oil alone in 2024—excluding refined oil and other oil-derived goods such as chemical products, which accounted for well over $40 billion. The UAE, likewise, exported $114 billion worth of crude oil that same year, and over $60 billion worth of other hydrocarbon products such as petroleum gas and refined oil. Bahrain, for its part, is a major exporter of processed oil and gas products, generating $5.49 billion in revenue from refined petroleum products. Similarly, Qatar is a major exporter of the world’s third-largest known natural gas reserves and produces approximately 1.746 million barrels of crude oil per day. On the other side of the conflict, Iran is likewise a major producer of oil and natural gas, possessing the second-largest natural gas reserves in the world after Russia; it is a major exporter of petroleum-derived products, exporting $1.88 billion worth of ethylene polymers alone in 2024.

All these figures underscore the importance of the Gulf states not only within the international energy market itself, but also in the broader global economy, as they export substantial quantities of energy and petroleum products that are critical for manufacturing nations such as China, India, the United States, and European countries; any disruption to these supplies would have far-reaching consequences. The nature of today’s globalized economy means that disruptions to critical points in global production chains in one part of the world have amplified and far-reaching consequences for economies across the globe. This is already evident in the ongoing conflict in the Persian Gulf.

Hormuz

The U.S. and Israel launched their military campaign against Iran on February 28. After targeting political and military sites, they turned their fire on energy infrastructure. On March 18, Israel attacked Iraniangas facilities in the South Pars gas field, a massive natural gas field shared by Iran and Qatar. In response, Iran launched a series of drone strikes on Qatari and Emirati gas infrastructure, causing significant damage to storage and processing facilities. According to Qatari and QatarEnergy authorities, the attack destroyed 17% of Qatar’s liquefied natural gas production capacity (equivalent to 12.8 million tons of LNG per year), resulting in approximately $20 billion in lost annual revenue. This attack is already having concerning long-term consequences for countries dependent on energy imports, as QatarEnergy has already invoked force majeure on long-term LNG contracts with countries such as Italy, Belgium, South Korea, and China.

Similarly, Iran’s closure of the Strait of Hormuz through attacks on shipping vessels has devastating consequences for the broader global economy in the long, medium, and short term—especially if the conflict drags on. Approximately 20% of the world’s LNG and 25% of global oil exports pass through the strait annually. Additionally, about 80% of Qatar’s and the UAE’s LNG exports are destined for Asian markets, and 20% for Europe. This is particularly concerning since the partial or total closure of the strait appears to be a core element of Iran’s strategy to pressure the U.S. and Gulf states into accepting favorable terms. This is exemplified by Iran’s intended strategy of implementing a toll system to allow ships from neutral or sympathetic states to pay for passage, while hostile or “unapproved” vessels are targeted.

If the conflict drags on, the closure of the Strait would have devastating effects. This would particularly affect energy-import-dependent Asian and European countries, especially those whose national economies are already strained by the crisis caused by sanctions on Russian energy exports following 2022. Currently, governments and international organizations such as the International Energy Agency have begun implementing stopgap and mitigating measures to offset and mitigate the impact of the crisis. At the start of the conflict, 32 IEA member states agreed to release 400 million barrels of oil from emergency reserves to dampen the crisis’s impact on oil prices, similar to what was done in 2022. Additionally, the IEA is advising statesto implement measures to reduce demand for energy and oil-derived goods. These include lowering speed limits on roads and highways, further encouraging public transportation, increasing remote or work-from-home arrangements, or reducing air travel. However, these measures are only temporary and can only limit or reduce the impact on the energy and oil markets; they cannot serve as permanent or long-term solutions to the crisis if the conflict continues in the coming months.

No alternatives

On the supply side of the issue, the Gulf states are working to secure and develop alternative export routes. While some states, such as Kuwait and Qatar, are simply unable to find alternatives due to the geography of the region, others—including Saudi Arabia, Iraq, and the UAE—are currently able to use existing oil pipelines to export hydrocarbons to the broader global market. Recently, Saudi Arabia restored capacity to its East-West pipeline, which had been attacked by Iran earlier in the conflict. The pipeline is capable of transporting crude from the oilfields in the Gulf to the port of Yambu on the network , allowing Saudi Arabia to bypass the Strait of Hormuz, making it a critical piece of energy infrastructure.

The UAE can utilize the Habshan–Fujairah pipeline, which is capable of transporting crude oil from facilities in Abu Dhabi to the port of Fujairah on the Gulf of Oman, thereby allowing it to bypass the Strait directly. Another alternative is the Kirkuk–Ceyhan oil pipeline operated by Turkey and Iraq, which transports oil from the oil fields in Kirkuk to the Mediterranean port of Ceyhan. However, this route has been a major target for sabotage throughout the decades of conflict in the region, making it necessary to repair and upgrade it in order to make exports through it viable again.

However, it is important to note that, at their current capacity, none of these alternative routes can even begin to offset the impact on global supply caused by the closure of the Strait of Hormuz, as their combined carrying capacity is 9 million barrels per day, compared to the approximately 20 million barrels that passed through the strait.

Three key takeaways

Given the nature of the leadership on both sides of the conflict, it is extremely difficult to make reliable predictions about possible outcomes. Nevertheless, based on what has already happened and on past experiences, it is possible to draw some conclusions if the conflict continues in the coming months.

First, the U.S. will seek to capitalize on the success of its Venezuela policy to offset the costs and repercussions of its actions—and apparent failure—with Iran. This is already evident in both explicitly stated policy goals and the aforementioned, seemingly accelerated easing of restrictions on the Venezuelan oil industry’s ability to export oil to the U.S., as well as the administration’s eagerness to encourage U.S. investment in the country.

Second, the shock to the oil market caused by the blockade and closure of the Strait of Hormuz will prompt both oil-exporting countries and oil-importing countries to seek alternative export routes and trade diversifications that are less vulnerable to external actors, as well as alternative energy sources; as evidenced by the renewed interest in restoring and expanding infrastructure such as the Kirkuk–Ceyhan pipeline.

Third, in the broader context of the 2022 energy crisis caused by Russia’s invasion of Ukraine, attacking energy infrastructure and exploiting instability to manipulate prices may become a more common strategy for international actors seeking to reshape the global order. This is evident in the apparent benefits that countries like Russia have reaped from the conflict in Iran and the looming energy crisis, including higher revenues from oil and petrochemical products.