Sunday Essay 16 | 2026

Iran, the United States and Oil: The Struggle for Control in a Fragmenting System

SUNDAY ESSAYS

4/12/2026

By mid-April 2026, the Iran–United States confrontation is no longer best understood as a question of escalation or de-escalation. The temporary ceasefire may have reduced immediate military pressure, but it has not resolved the underlying dynamics shaping the conflict. Instead, it has revealed something more consequential: this is no longer primarily a confrontation over security, but over control—control of energy flows, control of strategic geography and, increasingly, control over the rules that govern the global system itself.

What appears at first glance as instability is, more precisely, a redistribution of leverage.

At the centre of this redistribution lies the Strait of Hormuz. For decades, its importance has been understood in terms of volume—roughly one-fifth of global oil supply passes through it. But recent developments have shifted the focus from volume to control. The disruption of shipping, the targeting of infrastructure and the implicit threat of further restrictions have demonstrated that access to this route is not guaranteed. It can be shaped, limited, and, at times, leveraged.

This marks a fundamental shift. Energy is no longer just a commodity moving through neutral channels. It is increasingly an instrument of influence.

Iran’s position illustrates this clearly. While often described in terms of constraint—sanctions, military pressure, economic isolation—it retains a form of structural leverage that is difficult to counter: geography. Its proximity to the Strait of Hormuz allows it to influence not only its own exports, but the flow of energy from other producers in the region. Even limited disruption can have disproportionate effects on global markets.

This does not require full closure of the strait. It requires uncertainty. Delays, inspections, increased insurance costs and the risk of escalation are sufficient to alter behaviour. Shipping companies adjust routes, buyers seek alternatives, and markets reprice risk. In this sense, leverage is exercised not through control alone, but through the ability to shape expectations.

The United States, by contrast, retains a different form of leverage—military reach and financial influence. Its capacity to project power in the region remains unmatched, and its role in the global financial system continues to shape trade and capital flows. Yet recent developments highlight the limits of this position.

Military action can respond to disruption, but it cannot eliminate the underlying vulnerability. Securing shipping lanes addresses symptoms, not causes. At the same time, economic tools—sanctions, financial restrictions—carry their own constraints. They can limit adversaries, but they also shape global markets in ways that feed back into domestic conditions, particularly through energy prices.

This creates a tension within U.S. strategy. Actions taken to assert control externally can reduce flexibility internally. Rising fuel costs, for example, translate quickly into political and economic pressure. The result is not a loss of power, but a more constrained form of it.

What emerges is not a simple shift from one dominant actor to another, but a more complex distribution of influence. Different actors control different parts of the system.

Gulf producers, for instance, retain control over supply, but their exports depend on secure routes. Their leverage is therefore conditional—strong in terms of production, but dependent on broader stability.

China’s position reflects another dimension of this evolving landscape. As one of the largest consumers of Middle Eastern energy, it is highly exposed to disruptions. Yet this exposure has driven a deliberate strategy: reduce vulnerability by diversifying supply, increasing reserves and exploring alternative trade mechanisms.

This is not an immediate transformation, but a gradual repositioning. China is not seeking to control the system in the same way traditional powers have. Instead, it is working to operate within it on more favourable terms. The current crisis reinforces the logic of that approach.

At the same time, the financial dimension of energy trade is becoming more visible. As geopolitical tensions shape trade relationships, the mechanisms through which energy is priced and settled gain strategic importance. Discussions around alternative currencies and payment systems, while still limited in scope, reflect a broader question: who defines the rules of exchange?

These developments point toward a system that is becoming less centralised. Control is no longer concentrated in a single actor or domain. Instead, it is distributed across multiple nodes—geography, infrastructure, finance and market behaviour.

This distribution has important consequences. It reduces the likelihood of a single point of failure, but it also increases complexity. No actor has complete control, and no action is without unintended effects.

The role of markets in this system is particularly revealing. Energy prices are no longer determined solely by supply and demand. They are shaped by perception—by expectations of disruption, by assessments of risk and by interpretations of political signals.

This gives markets a form of indirect influence. They amplify certain developments, constrain others and feed back into policy decisions. When prices rise sharply, they influence inflation, which in turn shapes central bank policy. Policy decisions then affect growth, investment and currency stability. The system becomes a series of interconnected responses.

This interconnectedness does not eliminate power—it redistributes it. Influence is exercised through multiple channels, often simultaneously.

The economic consequences of this redistribution are already visible. Higher energy prices are feeding into transport, manufacturing and consumer costs, placing renewed pressure on inflation. Central banks are therefore operating within tighter constraints, balancing the need to control prices with the risk of slowing growth.

This constraint is itself a form of structural change. In previous periods, policymakers had greater scope to respond to shocks through monetary or fiscal measures. Today, that scope is reduced by the interconnected nature of the system. Actions in one area produce consequences in others.

For example, efforts to stabilise energy markets may conflict with broader strategic objectives. Similarly, measures to control inflation may amplify economic slowdown. Trade-offs become unavoidable.

This environment also reshapes investor behaviour. Markets are not retreating, but they are adjusting. Capital is moving toward sectors associated with resilience—energy, commodities, infrastructure—while more speculative areas see reduced interest.

This reflects a broader shift in expectations. Stability is no longer assumed. Instead, uncertainty becomes a baseline condition. The objective shifts from maximising returns to managing risk.

At a global level, the effects of this shift are uneven. Advanced economies retain greater capacity to absorb shocks through policy measures and financial buffers. Developing economies face more immediate exposure, particularly those reliant on imported energy and food.

This divergence introduces another layer of complexity. Economic pressure in one region can generate secondary effects elsewhere—through migration, political instability or shifts in trade patterns. The system is not only interconnected; it is asymmetrical.

Despite these pressures, it is important to recognise that the system continues to function. Energy flows, though disrupted, have not ceased entirely. Markets remain operational. Diplomatic channels, while strained, are still active.

This resilience is significant. It reflects adjustments made over time—diversification of supply, increased storage capacity, improved coordination. These measures have strengthened the system’s ability to absorb shocks.

However, resilience should not be confused with stability. It does not eliminate risk; it changes how risk is distributed and managed.

The current moment is therefore best understood not as a crisis in the traditional sense, but as a phase of reconfiguration. The rules that have governed the global system—how energy flows, how markets operate, how power is exercised—are being tested and, in some cases, adjusted.

The Iran–United States confrontation provides the immediate context for this process, but the underlying dynamics extend beyond it. They reflect a broader shift toward a more fragmented and contested system, where control is distributed, and influence is exercised through multiple channels.

Looking ahead, the key question is not whether tensions will escalate further, but how this redistribution of leverage will evolve. Even if the current conflict stabilises, the structural changes it has accelerated are likely to persist.

Energy security will remain a central concern. Financial systems will continue to adapt. Geopolitical relationships will be shaped increasingly by practical considerations rather than fixed alignments.

In that sense, the current moment is less a turning point than a confirmation. It confirms that the global system is moving toward a model where stability is not guaranteed by dominance, but negotiated through interaction.

For now, no single actor controls the system. Influence is shared, contested, and constantly shifting.

And in such a system, power is no longer defined by control alone, but by the ability to operate effectively within uncertainty.

That is the deeper shift now underway.

References:

Reuters — Strait of Hormuz disruption and structural oil risk

https://www.reuters.com/markets/commodities/irans-hormuz-toll-booth-set-hardwire-higher-energy-prices-2026-04-09/

Reuters — Global markets reacting to Iran conflict and oil volatility

https://www.reuters.com/world/china/global-markets-global-markets-2026-04-09/

The Guardian — Iran conflict, ceasefire dynamics and geopolitical tension

https://www.theguardian.com/world/live/2026/apr/middle-east-crisis-live

Financial Times — Oil markets, geopolitics and strategic supply risk

https://www.ft.com/commodities