Before the Iran war erupted, U.S. President Donald Trump was confident that the nation's vast petroleum wealth would shield it from the energy shock currently battering much of the world. However, as the conflict enters its fourth week, this protective barrier appears increasingly fragile.
Trump's gamble has only partially succeeded. Since February 28, when the U.S. and Israel launched airstrikes against Iran—triggering a regional war that has engulfed Middle Eastern energy infrastructure, blocked the Strait of Hormuz, and cut off roughly one-fifth of global oil and gas flows—the rise in U.S. oil prices has been smaller than in other regions.
Since late February, the global benchmark Brent crude has surged approximately 55% to around $110 per barrel, while U.S. West Texas Intermediate crude has increased by 50% to about $99 per barrel. The price gap between the two major benchmarks recently reached its highest level in a decade, excluding brief spikes during the COVID-19 pandemic.
This price differential reflects a structural shift in energy markets. Thanks to the shale boom over the past 15 years, the U.S. has become the world's largest producer of oil and natural gas, exporting more energy than it imports. Although U.S. refineries still import crude to optimize operations—including about 4% of total consumption from the Middle East last year—the nation's direct reliance on the Gulf region is far lower than that of Asia or Europe.
Asia has been the hardest-hit region, with around 60% of its oil imports dependent on the Middle East. Sudden supply disruptions have forced refineries to reduce operating rates, while governments have rolled out fuel subsidies and energy-saving measures at significant economic cost. The price of physical crude imported into the region recently soared above $150 per barrel.
Yet America's relative advantage is rapidly eroding.
As Middle Eastern supplies tighten, buyers in Asia and Europe are increasingly turning to alternative sources, including the U.S., for crude oil, refined fuels, and natural gas. This global scramble is diverting more American hydrocarbons to international markets and tightening domestic supplies.
According to analytics firm Kpler, U.S. crude oil exports in March are on track to hit a record 4.6 million barrels per day. Exports of refined products, primarily gasoline and diesel, are also expected to reach an all-time high of approximately 3.2 million barrels per day.
The lesson is clear: In an interconnected oil market, abundant domestic resources do not grant immunity from shocks.
Despite White House efforts to curb prices, U.S. retail gasoline prices have risen more than 30% this month and are likely to exceed $4 per gallon within days. The U.S. retail diesel price last week broke above $5 per gallon for only the second time in history. Wholesale prices for this industrial fuel have surged about 70%, only slightly below the nearly 80% increase seen in Europe, the world's largest diesel-importing region.
Trump has dismissed the price increases as a "small cost" for achieving war objectives. This confidence partly reflects the success of a swift intervention in Venezuela earlier this year. The capture of President Nicolás Maduro and a rapid leadership change allowed the U.S. to effectively control the country's substantial oil resources—an additional buffer that has so far proven insufficient.
Whether seizing Iran's fossil fuel wealth is an implicit goal of the current military operation remains unknown. But the perception that the U.S. could withstand an energy shock without severe domestic consequences almost certainly encouraged the Trump administration to undertake this high-stakes military gamble in the world's most critical energy hub.
That calculus now appears questionable.
U.S. shale oil producers, still wary after years of boom-and-bust cycles, remain cautious about increasing drilling despite higher oil prices. Labor shortages, supply chain constraints, and investor demands for capital discipline are limiting the pace of production growth.
Meanwhile, mitigation measures such as releasing strategic petroleum reserves have had limited effect.
President Trump hinted on Friday that the U.S. is considering ending the war, but the following day he threatened to "completely destroy" Iran's power plants if Tehran does not fully reopen the Strait of Hormuz within 48 hours.
The longer the Iran war drags on, the more U.S. consumers will bear the burden of rising fuel costs and heightened inflation—a potentially significant political consequence in an election year.
When—or if—the Strait of Hormuz will fully reopen remains unclear. The U.K., France, and other allies, after public disputes with Trump, are preparing a naval mission to help secure the waterway, but they are unlikely to intervene decisively while hostilities continue.
Reopening the Strait of Hormuz would almost certainly trigger a sharp decline in global oil prices. However, Middle Eastern producers would need weeks to restart oil fields idled by the conflict. Refineries, export terminals, and other infrastructure damaged in attacks will take even longer to repair, leading to persistent supply shortfalls.
Once hostilities cease, the price gap between regions may widen rather than shrink, as the U.S. supply chain—from wellhead to refinery—remains largely intact.
The war will also impose a lasting risk premium on Middle Eastern oil and gas, hitting economies most dependent on the region the hardest.
The notion that America's petroleum abundance could fully insulate it from global energy shocks has been put to the test—and found wanting.