Can Trump Control Global Oil? China Isn't Worried

At first glance, Donald Trump seems poised to achieve what was once unthinkable: creating a new oil cartel to rival OPEC. By asserting control over Venezuela and a potentially new government in Iran, the U.S. could theoretically influence 42% of global oil production, giving it a kill switch on China's energy-importing economy.

But this theory overlooks a fundamental rule of the global energy market. While diplomatic pressure can change leaders, it rarely breaks the deep-rooted commercial ties between oil producers and their biggest customers. History shows that those who try to control these flows almost always fail, and China's strategic position makes it particularly resilient.

The Illusion of a US-Led Oil Cartel

The idea that the U.S. could choke off China's energy supply hinges on its influence in key producer nations. After the capture of former Venezuelan President Nicolás Maduro on January 3, and with hypothetical backing for regime change in Iran, Washington appears to hold powerful cards. Since China is the top importer for both Venezuela and Iran, Beijing looks uniquely vulnerable.

However, this view is too simplistic. The underlying relationships that drive the oil trade are far more durable than political alliances. China's role in Venezuela's future is already central, and its relationship with Iran is even more deeply entrenched, making it unlikely to crumble under U.S. pressure.

Why Iran Won't Ditch Its Partnership with China

Even if a new government in Tehran sought better relations with the West, abandoning its strategic alignment with China is not a realistic option. The two nations are connected through a complex network of economic, diplomatic, and security interests.

Key pillars of the China-Iran partnership include:

• A 25-year strategic pact signed in 2021, outlining $400 billion in potential Chinese investments that provide a lifeline against international sanctions.

• Military cooperation, including joint naval exercises with other nations like South Africa and the United Arab Emirates.

• Shared geopolitical goals, with President Xi Jinping backing Iran's entry into the Shanghai Cooperation Organization (SCO) in 2023 and the expanded BRICS bloc to challenge U.S. dominance.

Beijing's approach is pragmatic. While Chinese officials express concern over recent protests in Iran, their primary position is to support stability. This allows China to position itself as a rational global actor, contrasting with what it portrays as an unreliable and predatory U.S. foreign policy.

History's Lesson: Oil Embargoes Rarely Succeed

Fears of oil being used as a geopolitical weapon are common, but history shows that producers rarely cut off customers for political reasons. The 1973 Arab oil embargo is a famous example, but its stated goal—to end Western military support for Israel—ultimately failed, demonstrating the limits of such tactics.

More recent examples reinforce this pattern:

• The U.S. continued to import Iranian oil intermittently for eight years after the 1979 Islamic Revolution.

• The European Union is not expected to phase out Russian gas imports completely until late next year, five years after the invasion of Ukraine.

The case of Venezuela further proves the point. Instead of being locked out, China is already being courted as a principal customer for post-Maduro oil by commodity trading giants Trafigura Group and Vitol Group. The market finds a way.

Why 2024 Isn't 1941 for China's Energy Security

There was one instance when an oil embargo had a decisive geopolitical impact: in 1941, when the U.S. halted oil exports to Japan. At the time, America supplied roughly 90% of Japan's fuel, and the cutoff directly precipitated the attack on Pearl Harbor.

Today, Trump has no such leverage over China. Russia is the only country that supplies more than 10% of China's crude oil, and most other major suppliers are middle powers unlikely to bow to U.S. demands.

Furthermore, China is actively reducing its vulnerability. The rapid adoption of electric vehicles is projected to cut Chinese oil demand by 1.76 million barrels this year. This figure is roughly equivalent to the combined oil imports from Iran and Venezuela, effectively neutralizing the threat of a supply cutoff from those two nations.

The Unstoppable Flow of Global Energy

Oil is a fungible commodity that always finds its level, seeping through the narrowest cracks to connect sellers with buyers. The fundamental laws of trade and geopolitics have not been suspended. Anyone betting that a single leader can suddenly control the global flow of energy is likely to be disappointed.