The U.S. intervened to protect the global economy against the oil crunch caused by the Iran War by boosting exports and?selectively relaxing sanctions, as well as tapping strategic reserves. Washington's reputation may suffer in some circles, but the conflict is cementing Washington's transformation into the world's leading energy superpower. The Organization of the Petroleum Exporting Countries is largely powerless, unlike in previous oil crisis. The Gulf producers were forced to cut back on production by 9 million barrels a day due to the near-hermetic closing of the Strait o'Hormuz. This robbed the Organization of Petroleum Exporting Countries of its most powerful lever, spare production capacity. Saudi Arabia has increased its exports by using an alternative pipeline route that bypasses Hormuz and goes through the Red Sea. Even that was not enough to compensate for the extent of the disruption.

Enter the United States. The U.S., with the largest oil industry in the world - surpassing Saudi Arabia in 2018 and Russia in production - as well as the currency that underpins the global trading system has a tremendous amount of leverage on the energy markets. In some ways, this power is similar to OPEC’s historical ability to adjust output to global changes in supply and demand. Washington hasn't hesitated to use it.

OIL FIREPOWER U.S. Oil exports have surged in the last few weeks, which has helped to calm the acute energy supply shock from the Middle East. This includes the squeeze on refined products. The total U.S. exports of oil earlier this month reached an all-time record of 12.9 millions bpd. Refined products made up over 60% of the total, according to Energy Information Administration.

Seaborne ?U.S. According to Kpler, oil exports will reach a new record of 9.6 million barrels per day in April. The flow to Asia is expected to nearly double from the pre-war level to 2.5 million barrels per day. This has cushioned Asian economies, which are among those most vulnerable to?Gulf Supply Losses - from further price spikes.

The Iran war brought a windfall to U.S. producers. According to ROI calculations the value of crude oil and refined products exports increased by about $32 billion in comparison with pre-war levels, increasing both corporate profits and tax receipts. The American oil industry's firepower doesn't?end at production. Washington agreed to release 172 millions barrels of its Strategic Petroleum Reserve over several tranches until 2027, as part of an emergency global drawdown of 400,000,000 barrels.

SPR was around?405 millions barrels on April 17 compared to 415 million barrels at the beginning of the war, meaning that the buffer against future supply shortages is still ample.

The United States has another tool at its disposal to influence the global energy supply: economic sanctions. The U.S. has selectively eased restrictions on the purchase of Russian and Iranian crude oil since March. On April 17, the Trump administration renewed a waiver that allowed countries to purchase sanctioned Russian crude oil at sea. The waiver was valid for a period of about one month.

Impact was swift. The impact has been swift.

These measures, by boosting Moscow and Tehran’s revenues – even temporarily – undermine broader U.S. goals in foreign policy.

Recently, the U.S. government has retracted on a part of its strategy. The U.S. administration did not renew the 30-day waiver issued on 20 March that allowed for the purchase of 140 million barrels if Iranian oil stored at sea. It also imposed a blockade of Hormuz to reduce Tehran's revenue. The balance of sanctions will always be delicate, balancing the need to exert pressure while limiting collateral damages for the global energy system. The U.S. still has the final say.

THE LIMITS OF Power

These measures, taken together, show that the U.S. is a "swing provider" de facto. And what Uncle Sam gives, he may also take away.

The U.S. president Donald Trump, could theoretically impose restrictions or outright bans on certain U.S. energy exports in order to cool down rising domestic fuel prices. This is a sensitive issue, especially ahead of the November midterm elections. A move of this kind would almost certainly drive international energy prices higher. A ban on exports is unlikely. This would cause a severe disruption in U.S. oil refining and production systems, which are geared structurally towards exporting excess volumes. This would strain the relationship with our allies in Asia and Europe, who rely heavily on us to replace lost Middle Eastern oil barrels. It could also lead to retaliatory actions. It is clear that the U.S. has limited powers. The U.S. Energy Industry is still largely governed by the market economy, unlike OPEC or OPEC+ (a wider producer alliance that includes Russia). Washington can't tell companies to increase or decrease output as it pleases, nor can they marshal spare capacity like Gulf producers have done in the past. The U.S. can't fully mimic OPEC as a manager for global supply.

It can respond quickly and in a large scale. Washington, through a combination public policy and private forces of the market, has helped ease some of the pain of consumers and revealed a market influence that is unmatched since OPEC was at its peak.

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(source: Reuters)