The release of Israeli hostages and the ceasefire are good news, but wars continue to rage, and oil wealth will determine who wins, who loses, and who prospers.
Fossil fuel exports have supported Moscow’s and Tehran’s wars globally, but are also the lifeblood of America’s economy and its alliances.
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Russia’s first European “invasion” was to build pipelines designed to make the continent energy dependent. In 2022, the full-scale Ukraine invasion followed, but has been resisted, and Kyiv now bombs Russian oil facilities to impair Moscow’s war effort.
Oil is also behind another looming war in petroleum-rich Venezuela, where its dictator, Nicholas Maduro, abuses his people, aligns with Russia, and enables drug and migrant smuggling into the US. As America strikes back, Maduro recently played his “oil card” by offering US President Donald Trump a dominant stake in his country’s gigantic oil fields for America’s oil giants in an attempt to stop America’s war against his narcos. The offer was rejected, but it exemplified how oil defines the current World Order: It is oil-rich America versus oil-rich Russia and Iran and their allies.
The production of oil, its consumption, and the associated power politics have shaped history since the 19th century and will continue to do so.
Russia: A Gas Station Posing as a Country
Russia’s leader, Vladimir Putin has long used oil and gas as weapons. He built gas pipelines to Europe to make it dependent, but European buyers scrambled to wean themselves off Russian gas. They replaced it with US and Middle East liquefied natural gas (LNG), Norwegian fossil fuels, and renewable energy sources.
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Now Moscow is desperate for new customers. Putin has created a gigantic “shadow fleet” to deliver illicit oil by ship, and hopes to build Power of Siberia 2, a costly, 4,000-mile-long (6,437-kilometer-long) pipeline to China that would replace lost European demand. In August, the Kremlin announced that technical work was “completed” and that the deal would soon be signed. But this has dragged on for years: Beijing demands cut-rate prices and financing guarantees, knowing Moscow has no alternative.
Meanwhile, Ukraine has launched its anti-oil war by sabotaging Russia’s refineries and pipelines. Long-range drones have struck oil processing plants deep inside Russian territory, knocking out an estimated 50% of all facilities that supply both domestic markets and export terminals. Each strike reduces Moscow’s revenues and raises the cost of repairing aging infrastructure.
Unlike battlefield losses, refinery damage strikes at the Kremlin’s treasury. Oil is Russia’s cash cow; kill the cow and you weaken the war effort.
Iran: A Gas Station With Terrorists
Iran’s role in the oil wars is equally destabilizing. Under heavy US sanctions, Tehran still sells discounted crude to China through Russia’s shadow fleet of tankers. These revenues finance Hezbollah, Hamas, and Houthis’ attacks on shipping in the Red Sea.
Washington tightened enforcement of oil sanctions, seizing tankers and targeting Iran’s smuggling networks. Each measure squeezed Tehran’s budget, but Iran has shown it can fight back asymmetrically.
Oil continues to be smuggled to China and other customers, and Houthi attacks on competing tankers and container ships in the Bab El-Mandeb Strait have disrupted global trade routes.
Insurance costs have soared, and oil shippers are forced to detour around Africa. These acts remind the world that even a pariah state with a weak economy can wield oil as a weapon.
China: The Achilles Heel of Oil Dependency
Beijing appears strong – its economy imports more oil than any other nation, its navy patrols the South China Sea, and it courts oil suppliers from Russia to the Middle East. But this reliance is also a vulnerability.
Roughly 70% of China’s oil must travel through maritime choke points like the Strait of Malacca and the Strait of Hormuz. In any conflict, these lifelines to China could be blocked by US or allied forces.
But the Siberian pipeline through Russia is a non-starter due to economics. Beijing is in a trade war with America, its debts soar, its economy slows, property prices have crashed, and China cannot afford an expensive pipeline project.
However, Xi Jinping plays footsie with Russia, Iran, and the Persian Gulf leaders to assure steady supplies of petroleum products.
Beijing has also initiated oil substitution policies and electrified its economy and infrastructure more than any other major nation using coal, and also renewables (solar, wind, hydro, geothermal, or modern biomass) or nuclear. This is costly, but China must reduce its fossil fuel dependence to tip the balance of power.
Its energy consumption peaked in 2024 because of solar and wind, but accounts for only 18% of total fuel usage. Full displacement is not realistic. The country remains hooked on fossil fuels.
The United States: From Importer to Energy Superpower
America “invented” petroleum and was the first nation to harness the gooey stuff industrially. It still dominates: While Russia and Iran flail, the US sits in an enviable position. Thanks to shale oil and gas and Canadian oil and natural gas reserves, America is still the world’s largest energy producer and exporter. In 2024, Canada was the source for about 60% of US crude oil imports.The US has also become the world’s biggest supplier of LNG since the Ukraine invasion. Europe is dependent on US LNG instead of Russian gas. And India and other Asian buyers now rely on US crude to diversify away from the Middle East.
This American fossil fuel supply dominance also determines prices worldwide because global benchmark prices are set in markets influenced by American production. This energy strength translates into geopolitical clout. It also enables Washington to design sanctions that actually work, to help allies weather oil shocks, and to punish adversaries by targeting their energy exports while keeping global markets stable.
Europe: Energy Dependent
Europe is held hostage to the fact that it mostly relies on oil from the Middle East, the US increasingly, Russia decreasingly, and eventually Central Asia. It cannot use oil as a geopolitical weapon, and Europe’s position in the “war of oil” hinges on its ability to accelerate its transition to alternatives like nuclear, renewables, and energy conservation.
India: Stuck in the Middle
India is the swing player in this oil war. With its population overtaking China’s and its growth accelerating, India needs ever-greater quantities of energy. It buys cheap, sanctioned Russian crude, processes it, and resells products to Europe. America is upset about this gambit and has begun to squeeze the country through high tariffs. This underscores the reality that India, like China, is increasingly dependent on the Middle East, a volatile region. Both scramble to build nuclear and renewable projects because their energy dependence remains their countries’ biggest challenge going forward.
The Next Battlefield
What emerges is a world where petroleum is power. The oil war involves weaponizing pipelines from Russia to China or building shadow fleets to carry illicit petroleum.
But the clear-cut winner going forward will be the United States, particularly if, as I have argued for years, it creates a US-Canada energy grid to tap into Canada’s mostly landlocked and discounted oil.
This would rationalize the production and distribution of fossil fuels to lower emissions, keep consumption costs down, eliminate imports from OPEC, and generate surpluses that could be exported to Europe, India, and other allies. Such a binational partnership – “Fortress America” — would crush OPEC, undercut petro-dictatorships from Moscow to Caracas to Tehran, and strengthen Europe and other allies.
(At the same time, the AI technology race requires enormous amounts of energy and major investments in power generation facilities. America is uniquely capable of meeting that challenge).
However, the immediate challenge is that Russia will continue to export chaos and instability, as will Iran. Both are dangerous, but both are beatable – if the West remembers that oil and energy are not just about dollars and cents but are the key to national security. The current oil war will decide who wins in Ukraine, Europe, and the Middle East, but also who will set the rules of the global order for decades to come.
Reprinted from [email protected] – Diane Francis on America and the World.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.