As a result of the Iran conflict and U.S. actions in Panama and Venezuela, American control over global oil supplies has expanded significantly, while the power of Iran, Russia, and China has declined.
The ongoing U.S.-Iran war has closed the Strait of Hormuz, the narrow waterway through which approximately 20% of the world’s oil and liquefied natural gas normally transits daily, triggering the largest energy supply disruption in the history of global oil markets. The closure has paralyzed China’s Belt and Road shipping infrastructure, eliminated Iran’s primary source of government revenue, and forced the world’s buyers to seek reliable alternative suppliers.
Whether by design or by a convergence of fortuitous circumstances, President Trump has used the war and its economic pressure points to position the United States as the dominant force in global energy, systematically reducing the power of Iran, China, and Russia while consolidating U.S. control over critical shipping lanes from the Persian Gulf to the Panama Canal.
U.S. crude exports are projected to reach a record 5.2 million barrels per day in May, as Asian buyers snap up cargoes to offset the loss of Middle Eastern supply. Currently, 171 crude tankers are bound for the U.S. Gulf Coast, compared with approximately 110 in a typical month, with supertanker bookings for May at 28 vessels against a monthly average of just five. The world’s buyers are choosing American oil because there is no comparable alternative at scale and reliability.
The IMF projects the U.S. economy will grow 2.3% this year, the strongest of any major advanced economy, cushioned partly by its status as a net energy exporter. That is a direct economic benefit accruing to the United States, while every other major economy absorbs damage from the same disruption.
On Iran specifically, the damage to its power is severe and multidimensional. The rial has fallen from 42,000 to over 1.1 million against the dollar, making it effectively the least valuable currency in the world. The U.S. naval blockade is cutting off Iranian oil revenue at an estimated $150 million per day, against a backdrop where oil accounted for roughly one quarter of government revenue and the government could not meet payroll obligations even before the war began. The IRGC’s parallel economic empire, which processed approximately half of Iran’s oil exports, is being directly targeted.
It has been widely reported that the IRGC created a toll system charging ships transiting the Strait of Hormuz up to $2 million per vessel, payable in Chinese yuan, Bitcoin, or cryptocurrency stablecoins. However, there are no confirmed reports that any ship has actually paid this toll. Shipping companies, when interviewed, described being approached with the offer but did not confirm agreeing to it. Independent vessel tracking data confirms that approximately 10 to 11 ships per day have traversed the strait, and some analysts have estimated IRGC daily toll revenue at $20 million based on that traffic volume. That figure is purely mathematical, derived by multiplying the number of transits by the stated fee. It does not constitute evidence that any payment was made.
China’s export profit margins were already razor-thin before the Iran war began. The Producer Price Index spent 40 consecutive months in negative territory through early 2026, industrial profits fell 13.1% year-on-year in November 2025, and manufacturing capacity utilization had dropped to 74%. The loss of access to discounted Iranian crude, 1.4 million barrels per day that made up over 80% of Iran’s shipped oil exports, combined with the surge in global energy and logistics costs produced by the Hormuz closure, is compounding that margin compression.
China is being forced to source oil from markets where the U.S. has pricing and supply influence, at prices roughly 50% above pre-war levels. Belt and Road shipping infrastructure through the Gulf is paralyzed, disrupting both petroleum imports and manufactured goods exports simultaneously. Beijing is absorbing the economic damage while having no effective military or diplomatic response.
On Russia, the indirect effect is significant. Russia had been benefiting from being a sanctioned-but-functioning energy exporter selling to China and others at a discount. As U.S. oil floods global markets at premium prices and buyers compete for American barrels, the structural case for Russian oil as an indispensable alternative weakens. U.S. LNG running at near-peak export capacity simultaneously undermines Russian natural gas leverage over Europe, which had been Moscow’s primary geopolitical tool since Ukraine.
U.S. strategic power consolidation in the Western Hemisphere is supported by U.S. actions in Panama and Venezuela. Last year, President Trump convinced Panama to remove Chinese commercial control over Panama Canal port facilities. Canal operations, while remaining the property of Panama, now more closely align with U.S. foreign policy objectives.
This was followed by the arrest of Venezuelan President Nicolás Maduro earlier this year during Operation Absolute Resolve, a U.S. military operation that resulted in his arrest in January 2026. Venezuelan oil policy is now substantially aligned with U.S. direction following the operation.
Combined with U.S. military dominance in the Caribbean established during the Venezuela operation, the U.S. sinking of narco-trafficking ships in the Caribbean, and joint U.S. military actions against traffickers in Ecuador and other countries, the Western Hemisphere is more firmly within the U.S. sphere of influence than at any point in decades.
Media have claimed that the war is causing friction with U.S. Gulf allies such as Saudi Arabia, the UAE, and Kuwait, which are absorbing serious economic damage from the Hormuz closure. However, this has produced no practical reduction in U.S. global power or the security architecture that underpins it.
Before the war, Gulf states expressed diplomatic reservations about U.S. military action against Iran and declined to offer their airspace for strikes. Once the war began, Iran attacked them directly with missiles and drones. The Arab League Secretary-General strongly condemned the Iranian retaliatory attacks against Qatar, Bahrain, Kuwait, the UAE, Jordan, and Saudi Arabia, characterizing them as a flagrant violation of sovereignty.
The UN Security Council adopted resolution 2817, submitted by Bahrain on behalf of the entire GCC plus Jordan, condemning Iran’s strikes. China and Russia abstained. Gulf states sided with the U.S. position against Iran at the UN while China and Russia refused to condemn attacks on Arab soil.
Throughout the conflict, Gulf states continued hosting U.S. military forces and received active U.S. and British air defense support. Saudi Arabia’s AI company, Humain pledged, not to purchase Chinese equipment, and the UAE’s G42 cut ties with Huawei, aligning both countries with the U.S.-led technological bloc restricting China’s access to advanced semiconductors.
No Gulf state has switched to China as a security partner, adopted yuan-denominated oil pricing as a result of the conflict, or reduced U.S. military access to the region. Iran attacking its Arab neighbors has driven Gulf states deeper into dependence on U.S. military protection, not away from it.
The war is accelerating a structural shift that will permanently reduce Iran’s ability to use the Strait of Hormuz as a geopolitical weapon. Within hours of Operation Epic Fury beginning, Saudi Arabia activated its long-prepared contingency plan. The East-West pipeline reached full capacity of 7 million barrels per day, with crude exports via the Red Sea port of Yanbu surging from a pre-crisis baseline of under 800,000 barrels per day to nearly 5 million barrels per day. The UAE simultaneously maximized its Abu Dhabi Crude Oil Pipeline, carrying up to 1.8 million barrels per day to Fujairah on the Gulf of Oman, bypassing Hormuz entirely.
The crisis has converted theoretical pipeline expansion plans into active investment decisions. Saudi Arabia is weighing expansions to the East-West pipeline and new Red Sea export terminals. The UAE is exploring a second pipeline to Fujairah. Proposed multi-country projects include pipelines linking Iraqi oil fields to Mediterranean ports and integrated energy links within the India-Middle East-Europe Economic Corridor.
The existing bypass capacity does not fully replace the strait. Combined alternative route capacity amounts to approximately 8 to 9 million barrels per day against the 17 to 21 million barrels per day that normally transits Hormuz. However, each new pipeline that comes online permanently erodes Iran’s ability to hold the global economy hostage by threatening closure. The 1980s Iran-Iraq war produced the East-West pipeline. The 2026 war is producing a second generation of bypass infrastructure on a larger scale, with active U.S. strategic backing, making a future Iranian closure of the strait progressively less catastrophic for global energy markets.
With exports reduced to almost nothing, Iran’s economy was projected by the IMF to contract by 10%. However, the IMF counts produced and stored oil as part of GDP even though it cannot be sold, so the real contraction will be even greater. The U.S. blockade of the strait is meant to ensure that no country purchases Iranian oil and that no country pays the $2 million toll for use of the strait.
By cutting off the IRGC’s revenue, the Trump administration hopes to accelerate the regime’s collapse and bring about an end to the war.
Unfortunately, this improved strategic positioning has come at a cost for American consumers, who are facing higher gasoline prices. Average U.S. gas prices are up roughly 40%, approximately $1.18 per gallon, since the start of the war. Oil prices are expected to come down once control of the strait has been completely wrestled from the grasp of the IRGC.
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