Venezuela, Iran, Ukraine, and Gaza appear to be separate crises, each with its own history and its own official Washington explanation. Viewed against the global energy economy, however, they begin to look considerably less distinct, as oil fields, gas reserves, pipelines, refineries, shipping lanes, sanctions, and competition for customers repeatedly intersect with American foreign policy. The countries and circumstances vary, but control over hydrocarbons and the markets through which they flow remains remarkably constant. Study the global energy economy if you want to understand American foreign policy.
After murdering fishermen accused of smuggling drugs in boats that could not plausibly make the journey across the Gulf to the United States and kidnapping Venezuelan President Nicolás Maduro, Washington moved remarkably quickly from military violence to the disposition of Venezuela’s oil. The Trump administration calls its new arrangement the “biggest oil deal in world history”: U.S. control over more than 65 billion barrels of proven reserves. A private company gets 100-year concessions on 17 fields, Washington gets rights to a 35 percent stake, and the United States gets preferential access to the crude, an extraordinary progression from gunboats and airstrikes to the kidnapping of a head of state and, finally, an oil deal.
This poses two problems that provide convenient solutions. First, Venezuela’s Bolivarian Constitution reserves the petroleum industry and other strategic industries to the state and requires state ownership of PDVSA, while the new hydrocarbons framework moves explicitly toward privatization. Such concessions will likely discredit the Bolivarian government that Washington has long tried to remove.
Next, Venezuelan crude is exceptionally heavy and difficult to process, but certain Gulf Coast refineries were built to handle it. In particular, Saudi Aramco’s American trading operation has already purchased Venezuelan heavy crude this year; and Aramco is the sole supplier to Motiva in Port Arthur, Texas, the largest refinery in the U.S. The money gets interesting here because Saudi Arabia’s relationship with Trump extends well beyond ordinary diplomacy. Trump bragged during his first campaign that Saudis bought his properties and “pay me millions,” while Saudi-funded lobbyists later spent hundreds of thousands at Trump’s Washington hotel. The Saudi sovereign wealth fund put $2 billion into Jared Kushner’s investment firm after he left the White House, Saudi-backed LIV Golf has repeatedly brought tournaments to Trump properties, and the Trump family business continues expanding its Saudi real-estate interests. Allegations that Saudi and Emirati money was illegally funneled into Trump’s campaigns should not be taken lightly.
Saudi Aramco now owns the American refinery ideally positioned for renewed Venezuelan heavy crude, while domestic drillers may be considerably less enthusiastic about restoring Venezuelan production. More supply means downward pressure on prices, and although cheap gasoline is good politics, cheap oil is not necessarily good for producers in Texas, Oklahoma, and North Dakota. Venezuela needs enormous investment before production can increase substantially, however, allowing Trump to promise cheaper energy now while red-state producers may not feel the competitive squeeze until after the midterms.
Iran offers another illustration of the relationship between American military policy and energy markets. The Strait of Hormuz normally carries roughly one-fifth of global oil and LNG shipments, and a U.S. naval blockade has accomplished what years of sanctions could not by reducing Iranian crude exports through the strait. Disruption there raises oil prices, increases shipping costs, and convulses LNG markets, making war over Hormuz inseparable from control over the movement and price of global energy.Trump has repeatedly juiced markets with bogus promises of imminent peace with Iran, boosting stocks and knocking down oil prices. Meanwhile, his accounts have traded millions in securities, including oil and gas stocks. Suspiciously large oil trades just before his Iran announcements have prompted calls for an insider-trading investigation, but a Congress accustomed to self-enrichment through insider trading will likely not mount an offensive on this front.
Ukraine presents much the same pattern. Ukrainian drones are systematically attacking Russia’s petroleum industry, damaging refineries, disrupting fuel supplies, and imposing repairs made more difficult by sanctions. Whatever the military rationale, the campaign is simultaneously degrading one of America’s principal energy competitors. Breaking Western Europe’s dependence on Russian energy has been a Washington objective since the early Cold War, when policymakers regarded European reliance on Soviet oil and gas as a strategic vulnerability that gave Moscow leverage over Western Europe and undermined the American policy of containing and isolating the Soviet Union.
Nord Stream belongs within that longer history. Before Russia invaded Ukraine, Biden promised that if Putin invaded, “there will be no longer a Nord Stream 2. We will bring an end to it.” Months later, the pipeline was blown up. Seymour Hersh reported that Biden ordered the operation and that American divers planted the explosives with Norwegian assistance; Washington denied it, and later investigations pointed toward Ukrainians (dependent on U.S. support and taking their marching orders from Washington). Who actually planted the charges is irrelevant, as the economic result is indisputable: infrastructure connecting Russia directly to Germany disappeared, Russian-European energy trade collapsed, and American LNG gained an enormous European market. Prices and profits are up.
The demand that Ukrainians continue fighting therefore deserves to be considered alongside the energy consequences of prolonging the war, particularly in light of Zelenskyy’s firing of popular Defense Minister Mykhailo Fedorov. After his dismissal, Fedorov warned about corruption, a military culture of lies and unaccountability, and the absence of a coherent strategy for both targeted attacks and ending the war. His criticism raises the question Washington would prefer Americans not ask: after years of death, mobilization, forced conscription, destroyed infrastructure, and enormous Western expenditures, what exactly is the plan?
Zelenskyy may indeed have a plan, but ending the war does not appear to be part of it. Perhaps that is unsurprising when Ukraine supplies the soldiers while Washington and its allies supply the money, weapons, and intelligence, and Ukrainian drones destroy Russian refineries. Sanctions remain in place, Europe remains separated from Russian energy, and American energy dominates European markets, making the war’s continuation a remarkably favorable strategic outcome for Washington.
With events moving so quickly, another hydrocarbon interest risks disappearing from view. Roughly 20 miles off Gaza sits the Gaza Marine field, containing about one trillion cubic feet of natural gas. Discovered by British Gas more than two decades ago, it could provide Palestinians with energy independence and billions in revenue, but it has never been developed. Israel retains the practical military power to determine whether it can be extracted, while British, American, and Israeli interests have maneuvered for decades around the eastern Mediterranean’s energy resources. Amid Gaza’s destruction and arguments over who controls what comes afterward, Anglo-American-Israeli ambitions to procure and control the region’s hydrocarbons should not disappear from view.
As long as there is war, sanctions can exclude Russian energy and ensure that somebody else gets the customer. Venezuela, Hormuz, Nord Stream, Russian refineries, and Gaza have very different histories, but hydrocarbons repeatedly appear at the center of American strategic interests. Military power rearranges energy markets, sanctions help lock the new arrangements into place, and the resulting profits rarely figure in public explanations for the violence. The dead do not appear on the balance sheet, but hydrocarbons do.
- Originally published at the New Hampshire Gazette.