Foreign Affairs
Once the world’s top oil importer, the U.S. is now its largest energy exporter, shifting its global role from stabilizer to self-interested power. This rise in energy dominance fuels isolationist policies, undercuts international cooperation, and reshapes both foreign and domestic agendas, echoing the disruptive patterns seen in other oil-rich states.
Authors: Michael L. Ross, Erik Voeten
President Donald Trump’s foreign policy has been disruptive and chaotic, marked by trade wars, withdrawals from international treaties, and contempt for traditional allies. Much of this turmoil stems from his “America first” worldview and populist leanings. But another factor, often overlooked and mostly unrelated to Trump’s particular preferences, is also at work. In the past 15 years, the U.S. economy has undergone a profound shift with dramatic geopolitical implications. After decades as the world’s largest oil importer, the United States has emerged as its leading exporter of oil and gas. Since then, the country has begun to behave less like a liberal hegemon and more like a classic petrostate.
The United States has been a major oil producer since the nineteenth century. After World War II, however, consumption began to outpace production. By the first decade of the twentieth century, the United States was importing more than 13 million barrels per day, making it by far the world’s largest oil importer. Then everything changed with “the shale revolution” that took place between 2005 and 2010: innovations in hydraulic fracturing and horizontal drilling that allowed companies to efficiently extract vast quantities of oil and gas from shale. U.S. production surged. Since 2008, the United States has more than doubled its share of crude oil output, and in 2018, it surpassed Saudi Arabia as the world’s top crude oil producer. In the process, it has achieved energy self-sufficiency for the first time since the late 1940s.
This transformation has redefined Washington’s global role. As a leading oil importer, the United States had aligned with other energy-consuming countries in securing maritime trade routes, stabilizing markets, and supporting international institutions. Now, like other top oil exporters, such as Russia and Saudi Arabia, the United States has lost its long-term interest in international cooperation and has become more willing to use the leverage gained by its production capacity to secure short-term concessions.
Oil and gas wealth can be a blessing, helping to fund generous domestic welfare programs or foreign aid. But it can also be a curse. Petrostates tend to have more autocratic governments, more belligerent foreign policies, and higher levels of corruption—trends that now apply to the United States. When aggressive autocrats such as Hugo Chávez of Venezuela, Saddam Hussein of Iraq, Vladimir Putin of Russia, or Muammar al-Qaddafi of Libya gained control of their oil-rich states, the energy wealth generated by those countries generally became a force for destabilization.
There are, of course, many factors behind the United States’ pivot on the world stage, including Trump’s rise, a surge in right-wing populism, and a domestic backlash against globalization and free trade. The United States has a much more diversified economy than does Russia or Saudi Arabia, and thus more diverse interests. But the United States’ emergence as the world’s leading oil and gas producer is a critical and often neglected element of today’s global disorder. Washington’s new position both reduces its financial incentive to foster stability and offers the United States leverage over energy importers, including close U.S. allies, which helps embolden Trump’s agenda. From the vantage point of its newly dominant position, the United States may not be able to see beyond the short-term benefits of energy independence to grasp the damage that its withdrawal from the rules-based order is doing to the world and to itself.
SELLER’S MARKET
Fossil fuels remain the lifeblood of the global economy. They account for more than one-third of maritime trade, in terms of volume. Most countries rely on a steady supply of oil and gas, and even brief disruptions can cripple power grids, paralyze transport systems, and halt industrial and agricultural output. Energy-importing nations are thus deeply invested in global stability; their prosperity depends on secure trade routes, steady prices, and predictable rules. But a stark divide exists between the behaviors of oil importers and exporters, with the former far more likely than the latter to embrace multilateralism and cooperate on international rules.
Oil exporters come in many shapes and sizes, ranging from impoverished, conflict-ridden Chad to wealthy, democratic Norway. Two problematic types, however, stand out. There are isolationists—such as Angola, Equatorial Guinea, and Oman—that tend to look inward and minimize their involvement in multilateral affairs. And then there are disrupters—such as Iran, Russia, and Venezuela—that defy global norms, sponsor foreign militias, and invade neighbors. For both types, rising oil exports correlate with reduced cooperation with other states.
U.S. foreign policy under Trump has a foot in each category: like the isolationists, it has withdrawn from international agreements and organizations; like the disrupters, it has signaled its interest in territorial expansion. Surging oil exports have given the United States new leverage over its oil-importing allies in Europe and East Asia. Europe is especially exposed. During Trump’s first term, the State Department warned that Europe’s dependence on Russian gas left it open to coercion. After Russia’s full-scale invasion of Ukraine in 2022, Europe turned to the United States for a growing fraction of its energy needs. Today, crude oil is the largest U.S. export to the continent, and 45 percent of the liquefied natural gas imported into Europe comes from the United States. This development has given the Trump administration more authority when demanding European trade concessions. It has also exposed how energy dependence, even on a nominal ally, represents strategic vulnerability for Europe. The continent’s countries cannot impose retaliatory tariffs on crude oil without serious economic consequences. This gives Washington a potent tool of influence.
Over time, oil wealth can also damage an exporter’s broader trade prospects. The currencies of major exporters typically appreciate as the price of oil rises, an effect called “the Dutch disease.” This diminishes the export competitiveness of those countries’ other goods, including those in the manufacturing and agriculture sectors. Since the shale boom, oil prices and the U.S. dollar have risen in tandem, suggesting an incipient case of Dutch disease in the United States. A stronger dollar, long central to American financial power, can deepen trade imbalances by making U.S. exports more expensive and thus less competitive.
The United States’ energy independence also gives it far less incentive to bear the burdens of enforcing global stability, especially in regions once vital to its energy security. Just 15 years ago, for instance, China, Europe, and the United States all depended heavily on Middle Eastern oil and so were communally inclined to protect strategic chokepoints of this trade, such as the Suez Canal. As the United States has become energy independent, however, its motivation to provide this kind of service has waned. In a leaked Signal group chat in March, in which senior administration officials discussed matters of national security, Vice President JD Vance argued that Europe, not the United States, should bear the burden of countering Houthi threats to shipping in the Red Sea: “Three percent of U.S. trade runs through [the Suez Canal]; 40 percent of European trade does,” Vance pointed out. Although the United States did eventually carry out the strikes on the Houthis under debate in the chat, Vance’s blunt reasoning signaled a new indifference. Past administrations saw global stability as a shared interest; many in the current administration view it as someone else’s problem.
DARK POWER
The United States’ retreat from the rules-based order did not happen all at once. Declining U.S. support for free trade, for instance, traces back to the mid-2010s, during a boom in the production of shale oil and gas. During his second term, President Barack Obama refused to appoint appellate judges to the World Trade Organization, effectively crippling the body’s dispute-resolution mechanism. This move, spurred in part by rulings by the organization that constrained U.S. trade policy, set a precedent. In his first term, Trump upped the ante by instituting widespread tariffs. President Joe Biden kept most of these tariffs in place, did not resume judge appointments to the World Trade Organization, and adopted new protectionist industrial policies and export sanctions that appeared to violate the organization’s rules. The erosion of U.S. support for multilateral trade cooperation coincided with the shale boom.
The shale revolution has also played an underappreciated role in reshaping domestic U.S. politics. In 2024, nearly 90 percent of campaign donations from the oil and gas industry went to Republican candidates. This investment is paying off: the Trump administration is aggressively advancing fossil fuel extraction, curtailing clean energy production, halting the collection of environmental data, opening new federal lands for oil and gas drilling, and dismantling climate regulations. The administrator of the Environmental Protection Agency, Lee Zeldin, has even announced plans to revoke the agency’s finding, in 2009, that greenhouse gases threaten public health—a key ruling that serves as the foundation of the United States’ federal climate policy.
As in other domains, Trump’s energy policy is rife with contradictions. On his first day back in office, he signed an executive order to “Unleash American Energy” by expediting oil and gas drilling and slashing regulations. Yet in the hope that he can ward off inflation, he has also vaguely promised to lower the cost of oil to $50 per barrel—a price that would reduce gasoline prices but also render much of U.S. shale unprofitable. Indeed, energy analysts expect a drop in U.S. oil production in 2025, despite Trump’s “drill, baby, drill” mantra. Even though his tariffs largely spare the oil and gas industry, the effects of his larger trade war could further depress both oil prices and global demand for fossil fuels. Put simply: although some of Trump’s policies are undergirded by energy dominance, others undercut it. Policy incoherence is characteristic of Trump, but this is a dilemma experienced by other petrostates, which simultaneously want oil prices high for their exports but low domestically to placate their citizens.
As long as the United States remains the world’s top energy producer, the temptation to use this advantage to extract trade concessions, walk away from costly commitments, and prioritize near-term gains over long-term alliances will persist. Energy dominance may seem like a boon for the future of American power, but unless the U.S. government shows more restraint, it could turn into a bust.
Credits: TCA, LLC.