The United States has become the main short-term beneficiary of disruption to global oil and gas supplies caused by the conflict with Iran, but rising demand is exposing the limits of American production capacity and the contradictions in Washington’s energy policy.
The United States has emerged as the principal short-term beneficiary of the disruption to global oil and gas supplies caused by the conflict with Iran, but the present surge in demand is exposing the limits of American production capacity and the contradictions in Washington’s energy policy.
According to the Financial Times, US oil and gas producers are struggling to keep pace with international demand following severe disruption in the Gulf and the closure of the Strait of Hormuz, one of the world’s most important energy transit routes. The crisis has increased the strategic importance of American crude oil, refined products and liquefied natural gas, particularly for Asian and European buyers seeking alternatives to Middle Eastern supply.
Recent market data underline the scale of the shift. Reuters reported that US crude and fuel exports have risen to record levels, with crude shipments reaching around 5.44m to 5.48m barrels per day, while refined product exports have also increased sharply. However, these volumes remain insufficient to compensate fully for the loss of Middle Eastern flows through Hormuz.
The US Energy Information Administration has warned that the supply shock is likely to keep prices elevated in the near term. Its April outlook forecast Brent crude averaging $103 per barrel in March and peaking at $115 per barrel in the second quarter of 2026, before easing only gradually as production and shipping disruptions subside.
American producers are therefore benefiting from higher prices and stronger export demand. Yet the industry cannot expand output quickly. Large oil and gas projects take years to approve, finance and bring into production. Even shale operators, which are more flexible than conventional producers, have become more cautious after previous cycles in which rapid drilling was followed by price falls and investor losses.
The Financial Times cited US government estimates suggesting that domestic production will increase by only 340,000 barrels per day over the next 12 months. That is a modest figure in the context of a global supply shock. It also reflects the discipline now imposed by capital markets on an industry once known for aggressive expansion.
A further complication is political. President Donald Trump has repeatedly called for more drilling, while also signalling that he wants oil prices to fall rapidly, reportedly towards $60 per barrel. For high-cost shale projects, such a price would undermine profitability. Kirk Edwards, president of Texas-based Latigo Petroleum, told the Financial Times that Washington could not simultaneously demand more drilling and lower prices while expecting capital to respond.
The result is an uneasy balance. US producers are central to the global response to the Hormuz disruption, but they are unlikely to launch a new uncontrolled drilling boom unless they are confident that prices will remain high enough to justify investment.
Other Western Hemisphere producers may also benefit. Brazil, Canada and Guyana are among the countries with the strongest prospects for increasing supply in the coming years. Their relative distance from the Gulf, combined with expanding production capacity, gives them added significance at a time when importers are reassessing exposure to Middle Eastern routes.
For importing economies, however, the crisis is negative. Higher oil and gas prices are raising transport, electricity and industrial costs. Some countries have already faced fuel shortages and rationing pressures. The longer disruption continues, the more likely it is to feed inflation and weaken growth.
There is also a longer-term risk for the oil and gas sector itself. Wood Mackenzie has argued that a prolonged disruption to Middle Eastern energy supplies could accelerate structural changes in global energy systems, reducing reliance on oil and gas over time. Its scenario analysis suggests that a major geopolitical disruption could cut oil demand by 20 per cent and gas demand by 10 per cent by 2050, as governments pursue greater energy independence.
One immediate effect may be increased interest in electric vehicles. Sustained high petrol prices tend to strengthen the economic case for electrification, particularly in urban transport. That would favour China, which has expanded exports of lower-cost electric vehicles and is already a major force in global battery supply chains.
The present crisis therefore strengthens US energy influence in the short term, but it does not remove the underlying constraints facing American producers. Nor does it guarantee a durable advantage for oil and gas. If high prices persist, they may accelerate the very shifts in consumption and investment that reduce future dependence on hydrocarbons.
The war with Iran has confirmed the strategic weight of US energy exports. It has also shown that energy dominance is not the same as unlimited supply.
