The sequence of events stretching from Venezuela to the war in Iran, the closure of the Strait of Hormuz, and the simultaneous degradation of Russian energy infrastructure by Ukraine appears, at first glance, as a series of disconnected crises. Looked at more closely, however, these developments reveal a coherent pattern. What appears as disruption begins to resemble design.
The emerging energy rebalancing—away from the Gulf-centered Eurasian system and toward the Atlantic Basin—is not accidental. It is broadly consistent with the logic articulated in the 2025 U.S. National Security Strategy (NSS), which elevates ‘restoring American energy dominance’ to a central strategic priority and explicitly links energy production, industrial strength, and technological leadership to national power. But the NSS goes further than previous strategic documents. It frames energy not merely as an economic asset but as an instrument of geopolitical power—a means of shaping the behavior of allies and adversaries by controlling the systems through which energy moves, is priced, is financed, and is insured. The implication is profound: energy is no longer simply a commodity. It is a weapon.
From Markets to Power: The Return of Energy Geopolitics
The closure of the Strait of Hormuz has triggered the largest energy disruption in modern history. At the peak of the crisis, at least 12 million barrels per day were removed from effective circulation, with total export flow disruptions reaching 15–18 million barrels per day. Gulf exports fell by more than 60 percent, while floating storage surged above 50 million barrels—underscoring that the problem was not production alone but the inability to move supply to market.
Before the crisis, the Strait carried approximately 20–21 million barrels per day, nearly 20 percent of global oil consumption, and around one-fifth of global LNG trade. Roughly four-fifths of these volumes were destined for Asia, with China, India, Japan, and South Korea accounting for nearly 70 percent of total flows. When the chokepoint closed, the shock propagated eastward with asymmetric force.
The global energy system has split into two partially disconnected basins. On one side lies the Eurasian system—centered on the Gulf and Russia—where supply is stranded, infrastructure is under attack, and export routes are compromised. On the other lies the Atlantic Basin, where production remains deliverable and increasingly indispensable. This distinction between production and deliverability is the key to understanding the new system. In a chokepoint crisis, it is not the size of reserves that matters but the ability to move energy to market. Accessibility, not abundance, determines power.
The result has been a massive reallocation of flows. U.S. crude exports have surged to approximately 5.2 million barrels per day, while refined product exports have reached record levels and LPG shipments have approached 2.5 million barrels per day, with substantial volumes redirected to Asia to compensate for lost Middle Eastern supply. Northern European and African crude grades have traded at extreme premiums—reaching approximately $150 per barrel at peak in physical markets—reflecting the acute scarcity of non-Gulf barrels. The geography of energy has been redrawn.
Energy Dominance as Strategy: The NSS Framework
The reconfiguration aligns closely with the operational logic of the NSS. What distinguishes the 2025 strategy from its predecessors is its explicit treatment of energy interdependence as a tool of statecraft rather than a condition to be managed. The document does not merely seek American self-sufficiency. It seeks American centrality—the ability to shape the structure of others’ dependence.
Energy dominance, as articulated in the strategy, rests on three mutually reinforcing pillars: maximizing domestic production, controlling flows, and leveraging exports to shape the behavior of both allies and adversaries. Each is now visible in practice.
The United States has become the system’s swing supplier. The shale revolution — transforming America from the world’s largest importer into its largest producer and a leading LNG exporter — provides the material foundation. What was once a structural vulnerability has become a strategic asset. The United States now operates close to effective net-exporter status in crude oil terms and dominates LNG supply globally.
Control over flows has emerged as equally decisive. The disruption of Hormuz has not only removed supply; it has reconfigured routes. Energy that once moved along short Gulf–Asia corridors is now being rerouted across longer Atlantic–Asia routes. Shipping distances have expanded sharply, tightening tanker availability, pushing freight rates higher, and concentrating routing decisions through chokepoints and corridors where Western naval presence is dominant.
The crisis has thereby deepened asymmetric interdependence. Europe, having reduced its reliance on Russian energy, now sources a growing share of its gas and refined products from the United States. Asian economies, cut off from Gulf supply, are forced to compete for Atlantic barrels and Russian crude at higher cost and under greater logistical strain. The United States has not achieved autarky. It has achieved something more strategically valuable — centrality in a fragmented system.
The Financial Architecture as Instrument of Power
The energy weapon would be blunt without the financial architecture that enforces it. Here the United States possesses a structural advantage that no other power can replicate at scale: dominance over the systems through which energy is priced, settled, and financed.
Oil is priced in dollars. The clearing of international energy transactions runs overwhelmingly through dollar-denominated systems anchored in Western financial infrastructure. SWIFT—the global messaging system for interbank transfers—and the correspondent banking networks of New York and London sit at the center of this architecture. Access to these systems is, in effect, access to the global energy market.
Primary and secondary sanctions exploit this centrality. By designating entities and jurisdictions as subject to sanctions, Washington can deny access to dollar clearing, correspondent banking, and international capital markets—not only to the sanctioned parties themselves but also to any third-country institution that transacts with them. The extraterritorial reach of U.S. financial sanctions has no equivalent in international law or rival power. It is the financial expression of dominance.
The cases of Iran and Venezuela illustrate the mechanism. Both countries attempted to construct parallel financial channels to sustain energy exports outside the dollar system. Iran developed a closed-loop barter system in which Iranian oil shipments were exchanged for Chinese goods, technology, and infrastructure investment, bypassing conventional settlement entirely. Venezuela similarly directed oil exports to China under financing arrangements that circumvented Western banks. These systems were ingenious precisely because they acknowledged their own fragility: they were designed for a world in which dollar access was denied.
Yet they proved insufficient the moment hard power entered the equation. The Chinese financial system—centered on the Cross-Border Interbank Payment System (CIPS) and supplemented by bilateral currency swap arrangements—remains a regional architecture. As of 2025, CIPS remains far smaller and less globally embedded than SWIFT-centered dollar clearing. It lacks the corresponding banking depth, the legal infrastructure, and the market liquidity to serve as a genuine alternative.
There is a further dimension that is rarely noted. The reintegration of Venezuelan and potentially Iranian oil into the dollar-denominated market—which is Washington’s objective in case of a post-conflict Iranian settlement—would represent not merely a geopolitical shift but a structural reinforcement of dollar primacy. Sanctioned oil flowing through shadow networks outside the dollar system reduces the scope of petrodollar recycling. Oil reintegrated into Western-aligned markets flows back through dollar instruments. The strategic logic of the ‘rollback’ of Chinese presence is thus simultaneously geopolitical and monetary: it expands the perimeter of dollar-denominated energy trade.
Shipping, Insurance, and the Weaponization of Connectivity
The energy shock is simultaneously a shipping shock—and it is here that a largely overlooked instrument of Western power has come into its own.
The closure of Hormuz has transformed maritime trade patterns, increasing voyage distances and fragmenting what was once a unified global shipping market. Short-haul Gulf routes have been replaced by long-haul Atlantic routes. Even as total volumes have declined, ton-mile demand has increased, pushing freight rates higher and creating scarcity rents in tanker and LNG shipping. The diversion of flows around the Cape of Good Hope and the disruption of Red Sea transit have further extended voyage times and costs.
But the more consequential development is the weaponization of maritime insurance. The global shipping insurance market is overwhelmingly concentrated in Western institutions—Lloyd’s of London syndicates and the thirteen Protection and Indemnity (P&I) Clubs that collectively cover approximately 90 percent of the world’s ocean-going tonnage. These are not governmental bodies. They are commercial institutions. Yet their decisions carry the force of policy.
War-risk premiums have surged, and significant areas of the Gulf have become effectively uninsurable under standard commercial terms. This has a direct operational consequence: vessels operating without war-risk coverage face denial of port access, loss of cargo financing, and inability to obtain letters of credit from international banks. In practice, uninsurable means inoperable within the formal global economy. Ships can still move, but they cannot transact.
This is the mechanism behind the degradation of the so-called ‘dark fleet’—the several hundred tankers assembled by Russia, Iran, and others to transport sanctioned oil outside Western regulatory systems. The dark fleet was designed to circumvent sanctions by operating under non-Western flags, with opaque ownership structures and informal insurance arrangements. It functioned tolerably during periods of moderate enforcement. Under sustained pressure — through blacklisting of specific vessels, denial of port access in third countries, and escalating war-risk conditions — its effective capacity has been progressively constrained. Even where flows continue, they do so under degraded efficiency, higher transaction costs, longer voyage times, and greater risk of disruption.
The result is a layered system of control. Formal sanctions restrict the most direct channels. Insurance constraints raise the cost and risk of informal channels. Financial clearing requirements ensure that even where physical flows persist, the proceeds are difficult to realize. Control over resources without control over flows is insufficient. The ability to move energy—securely, reliably, and at scale—has become as important as the ability to produce it. The United States and its allies control both dimensions.
Eurasia Under Pressure
The losers in this rebalancing are concentrated in the Eurasian system, though unevenly distributed.
Gulf producers have suffered severe losses. Iraq and Kuwait, lacking meaningful bypass infrastructure, have seen oil export revenues fall by approximately 75 percent in the acute phase of the crisis. The UAE has experienced production declines of more than 50 percent at points, while even Saudi Arabia has faced significant disruptions to pipeline throughput and export logistics. The region has also suffered direct infrastructure damage, with attacks on processing facilities, pipelines, and export terminals compounding the impact of the chokepoint closure.
Asian importers face a different but equally severe shock. Japan’s refinery utilization has fallen below 70 percent, reflecting the difficulties in replacing Middle Eastern grades at competitive cost. China’s crude imports from the Middle East have dropped sharply. LPG flows from the Gulf have fallen by more than 70 percent, forcing substitution from U.S. and other non-Gulf cargoes and contributing to demand destruction in petrochemicals and household energy use across Asia.
Russia occupies an ambiguous position. On the one hand, it benefits from higher prices and increased demand as a substitute supplier, with monthly oil tax receipts estimated to have approximately doubled during periods of peak disruption. On the other, Ukrainian strikes have degraded a significant share of Russia’s export capacity across key terminals and pipelines. According to Reuters, Ukrainian attacks impaired 40% of Russia’s export capacity, around 2 million barrels per day. Russia gains revenue, but under operational constraint and at the cost of accelerating infrastructure deterioration.
China also faces a significant challenge. Before the crisis, approximately 40 percent of its crude imports came from Russia, Iran, and Venezuela—the three principal ‘pariah’ suppliers offering discounted oil outside Western sanctions architecture. The simultaneous disruption of Iranian supply and Venezuelan production has removed two of these three pillars in rapid succession. Russian supply remains, but at higher cost and under increasing logistical strain as rerouting demands grow. The closed-loop financial arrangements that sustained discounted trade with Tehran are under strain. The Belt and Road Initiative infrastructure investments in Iran — valued at up to $400 billion under the 2021 Comprehensive Strategic Partnership — face severe uncertainty.
Energy, Technology, and the AI Nexus
The NSS makes an explicit and consequential connection between energy dominance and technological leadership, particularly in artificial intelligence. This link is not rhetorical. It is structural.
AI systems require vast, reliable, and low-cost electricity. The training and inference operations of large-scale AI models demand continuous gigawatt-scale power supply with very high uptime requirements. Data center construction—accelerating sharply across the United States—is already placing measurable pressure on grid capacity and driving demand for new generation, including gas-fired capacity. The competition for AI primacy is therefore inseparable from the competition over energy systems.
The United States’ strategic posture reflects this reality. By expanding energy production and exports, Washington strengthens the material foundation of its domestic technological ecosystem while simultaneously constraining the energy security of its principal technological rival. Export controls on advanced semiconductors and AI systems — applied to China since 2022 and tightened progressively since — constrain Beijing’s ability to convert energy into computational power at scale. Energy dominance and technological dominance are mutually reinforcing: control over energy enables control over computation; control over computation enhances economic and military power.
China faces a dual constraint that the crisis has sharpened. It must secure sufficient energy to sustain its industrial and technological ambitions while operating in a system where both energy routes and advanced technologies are increasingly contested. The loss of discounted Iranian and Venezuelan oil raises the effective cost of China’s energy inputs. The lengthening and increasing vulnerability of remaining supply chains — particularly through the Strait of Malacca, which carries the bulk of China’s seaborne energy imports — introduces a strategic exposure that no amount of reserve stockpiling can permanently offset. China’s strategic petroleum reserves of 1.2–1.4 billion barrels provide a buffer of approximately three months under crisis conditions. They do not provide strategic independence.
A System in Transition
Taken together, these developments suggest that the global energy system is undergoing a structural transition of first-order significance. The era of a fully integrated, efficiency-driven commodity market—in which the lowest-cost producer could reliably reach the highest-value market—is giving way to a fragmented system shaped by geopolitics, infrastructure control, and strategic competition.
This fragmentation is asymmetrical. The United States is uniquely positioned to benefit from it. The combination of resource abundance, deliverability advantage, naval dominance, financial architecture control, and technological leadership places it at the center of the emerging order in ways that no rival can replicate. China produces relatively little oil domestically, controls no major chokepoints, lacks a globally operable financial clearing system, and remains dependent on Western-dominated shipping insurance for the bulk of its seaborne trade. Russia produces energy abundantly but cannot deliver freely. The Gulf states produce energy abundantly but cannot protect their own export routes.
The critical analytical question is whether this outcome is merely opportunistic—a fortunate convergence of crises from which the United States happens to benefit—or reflects a deeper strategic logic. The evidence increasingly points to the latter. The 2025 NSS does not merely describe American energy advantages. It prescribes their active deployment as instruments of geopolitical leverage. The convergence of events—from Venezuela to Iran, from Hormuz to Ukraine—aligns with a strategy that weaponizes interdependence by constraining alternatives, degrading parallel architectures, and deepening the structural centrality of American-aligned systems. What appears as a series of crises may, in fact, be the operationalization of a grand strategy.
Conclusion
The rebalancing of global energy is not simply a market adjustment. It is a redistribution of power — across producers, across consumers, and across the financial and maritime systems that connect them.
Energy flows have shifted westward. Economic pressure has shifted eastward. Maritime routes have been reconfigured. Sanctions have reshaped networks. The financial architecture that once sustained parallel energy economies outside the dollar system has been disrupted. Technological competition has intensified precisely at the moment when energy security has become a precondition for technological primacy.
In this emerging system, the decisive variable is not access to resources alone but control over the networks that move, finance, insure, and transform them. Energy dominance, as the NSS correctly identifies, is not only about self-sufficiency. It is about shaping the structure of energy dependence—determining who can reach whom, on what terms, and at what cost.
The current crisis represents the return of energy geopolitics, the emergence of energy as the central terrain of great power competition in the twenty-first century. In the emerging order, the decisive question is not who produces the most energy, but who controls the systems through which it moves, is priced, and is insured. The United States has answered that question. The rest of the world is still calculating the implications.
