Gulf Instability Fuels America's Energy Dominance Ambitions

The global energy order is shifting as the US increasingly competes directly with Gulf producers rather than merely acting as their protector. President Donald Trump once boasted on Truth Social about the "biggest oil deal in history" – a concession contract to develop 17 oil fields in Venezuela over 100 years, potentially securing 65 billion barrels of oil for the US.

Around the same time, QatarEnergy informed Edison – one of its largest European customers – that force majeure on liquefied natural gas (LNG) shipments would extend into early November. Five more cargoes were cancelled, bringing the total to 29, equivalent to roughly 3.8 billion cubic meters of gas. The contract dates back to 2009 and typically covers about one-tenth of Italy's annual consumption demand. Edison has maintained supply to its customers by sourcing alternatives, including from the US.

For decades, the tacit deal between Washington and the Gulf was clear: the US protected the region and kept sea lanes open; Gulf producers supplied the energy the global economy depended on and transacted in US dollars, benefiting the American economy.

Now, that deal has been inverted. The US no longer just protects Gulf energy – it competes with it, and increasingly profits when the region cannot deliver due to instability. Six months of conflict have significantly impacted Qatar's LNG exports. Other Gulf states like Kuwait, Saudi Arabia, and the UAE have also seen sharp declines in crude oil export volumes. Meanwhile, US oil and gas have filled the gap, and American energy majors have posted record profits.

A distinction must be made between the US government and the dense network of private interests surrounding it. Washington seeks strategic leverage over Iran and wants to maintain influence with Gulf states. Energy companies want access to reserves, favorable regulations, advantageous prices, and new customers. Trump fuses both under the banner of "energy dominance": state power opens doors, private capital walks through.

Israel plays a crucial role in this picture. Chevron operates Israel's two main offshore gas fields, holding nearly 40% of Leviathan and 25% of Tamar. Leviathan is expanding following last year's $35 billion deal to increase exports to Egypt. Israel is not an independent US rival like Qatar, but rather an Eastern Mediterranean gas hub tied to an American operator, fitting into a US-backed regional system linking Israel, Egypt, and Jordan.

Chevron is the thread running through the story: with major interests in US production, control over Israel's most significant gas assets, and readiness to expand in Venezuela. This shows how the exercise of American power easily translates into commercial opportunities for US companies.

Israel is determined not to let its confrontation with Iran end in a way perceived as disadvantageous. The US-Iran memorandum signed in June did not meet Israel's war objectives. Israel has declared itself unbound by its terms, emphasizing its freedom of action in Lebanon and having resumed strikes while the US tried to maintain talks. For Israel, ceasefires are often just pauses, not lasting solutions – opportunities to regroup and preserve the right to strike. Israel wants to prevent Iran from rebuilding its nuclear, missile, and regional capabilities, while its leadership fears that accepting a deal would be seen as weakness before elections.

The consequences of Israel pushing for continuous conflict align with US energy interests. Pressure on Iran makes the Strait of Hormuz unsafe, leaves Gulf exports vulnerable, and drives up risk premiums on energy shipping. Israel and American energy companies do not need a shared plan for their interests to reinforce each other.

On prices, Trump constantly talks about cheap oil, but US producers cannot thrive if prices are too low. A Dallas Fed survey shows US companies need an average price of about $43 per barrel to operate existing wells and $66 to drill new profitable wells. The two main Permian basins hover around $61-62 per barrel. Therefore, Trump needs a narrow band: oil cheap enough to curb inflation, but expensive enough to sustain investment in shale, fracking, and exports. Gulf instability helps maintain this band – no catastrophe needed, just prices that make the next American well economically viable.

This explains the appeal of a no-war, no-peace scenario. A full-scale war could close Hormuz, send prices soaring, and threaten Chevron's operations in Israel. A lasting agreement would eliminate the risk premium, restore confidence in Gulf supply, and limit Israel's freedom of action. Controlled instability lies between the two extremes: enough restraint to protect US-linked production, but lacking the diplomacy to make Gulf energy fully reliable again.

Israel keeps Iran under pressure. Washington maintains leverage over allies. American producers gain customers and prices that support trade. The danger lies in this convergence: many actors with power now have an interest in preventing the crisis from reaching a final resolution.

The Gulf still holds vast reserves and low production costs that the US cannot match. But reserves no longer determine market power – reliability is now the key factor. Estimates suggest only 3.5 to 5.5 million barrels per day could transit Saudi and UAE pipelines to bypass Hormuz. The rest still depends on a single choke point, despite decades of weapons purchases, foreign bases, and security commitments.

The biggest threat to the Gulf's energy future is not depletion but customers learning to live without them. Every delayed tanker reinforces the case for the Atlantic alternative. Every Qatari cargo replaced by US LNG creates relationships that could outlast the war. American power, once partly based on protecting the flow of Gulf energy, is now increasingly based on replacing it.