President Donald Trump’s supposed weekslong war on Iran has now trudged into months, but while it’s hard to say whether he’s winning his war over the country’s suicidal dictatorship, it’s becoming increasingly clear that, against all odds and a concerted, anti-American psy-op, the White House is winning its war for oil independence.
In a narrative-defying note to investors, analysts at Goldman Sachs last week reported that oil flows through the Persian Gulf have risen to two-thirds of their pre-war levels, with 8 million to 10 million barrels per day of oil specifically transiting the Strait of Hormuz and another 7 to 8 million bpd circumventing the strait through U.S. Navy escorts, the Saudi East-West pipeline, and the UAE’s Fujairah pipeline. All in all, total oil and gas transit is up to 15 to 16 million bpd versus the March nadir of just 5 to 6 million bpd.
Meanwhile, in Venezuela, the Trump administration’s 100-year deal with Delcy Rodriguez’s puppet regime ostensibly grants the U.S. 55% rights of 17 of the nation’s oil fields, equivalent to one-fifth of Venezuela’s proven oil reserves. But ignore our government’s hypothetical prospect of a century-long deal with a communist; our private oil and gas operators have ensured that the U.S. is currently receiving well over a half-million bpd of crude–half of Venezuela’s entire current output — right now. This amounts to about 4% of our domestic output, and it’s a figure that’s slated only to increase as Chevron has announced a new $7 billion investment program in Venezuela with the goal of doubling its production from roughly 300,000 bpd in the country to 600,000 and expanding its physical acreage of control.
If you have been a passive observer of the anti-American global media or, worse, the blindly anti-Trump domestic media for the past half year, you would think that America’s war on Iran has long been lost. You would think that the regime fully controls the Persian Gulf and that the U.S. is retreating into autarky and decline.
But have oil markets behaved like the ayatollah fully controls one-fifth of the world’s oil and gas supply?
Clearly not, as the data have been telling us a vastly different story.
After peaking at $120 in April from pre-war levels of around $70, global oil futures haven’t broached over $100 for more than a moment since the start of the summer. And global oil futures have come completely uncoupled from American oil futures, which have consistently traded at a discount between $5 and $10 for months now. The “America Last” contingent will try to attribute the relative moderation of oil prices to China’s decision to rely on reserves rather than imports, yet this isn’t a consequence of the benevolence of Xi Jinping but rather the abysmal fundamentals of the Chinese economy and the authoritarian country’s reliance on buying sanctioned oil at a discount for its teapot refineries.
The verdict is still out on the war for Iran, though the G20’s finance ministers meeting was a masterclass from Treasury Secretary Scott Bessent and his debut of Operation Economic Outcast. But the war for American oil independence is being won, despite the best efforts and hopes of the rest of the world. The national gas price is averaging around $4.10 per gallon. Couple continued gains in Persian Gulf and Venezuelan exports, plus the season trend as we leave summer demand, and Trump could very well see the average gallon of gas head back toward $3.60 before the midterm elections.