Bullies are often insecure

How Venezuelan oil, an unstable Iran, and NATO tensions allow the US to confront its rivals

Since December I have heard whispers from sources about developments stemming from meetings between Trump, Rubio, and Hegseth. The expectation was that something was going to happen then. My first thought was Venezuela, given the escalations since August.

Nothing happened on the day that something was supposed to happen. This is not uncommon; the timing of supposed something was close to Christmas, so I was especially doubtful. It would be strategically unwise and not very Rubio-esque to release high-profile news in the week where the public would have relatively more spare time to scrutinize and demonstrate.

Fast forward to the first week of January and I woke to images of Caracas in flames. Well, I definitely did not think that the something was a kidnapping plot of a president.  Many analysts hold the view that US’s intervention in Venezuela is about oil, and Washington seems to want the public to believe so.

But the US has been posturing for Venezuelan oil since Harry Truman’s time. So why now, and why in this way?

My take: It seems to me less a grab for oil than an attempt for the US to reshape the geopolitical conditions under which power is exercised in the era of China’s impending rise. 

1. Venezuela (and its oil) allows the US to reassert dominance in the Western Hemisphere, limiting the US’s rivals influence in Latin America. Oil is not an end in itself.

2. Having access to the oil, even if it’s a perceived access, strengthens Washington’s ability to act as an energy stabilizer for NATO, precisely as it strains alliance cohesion over Greenland. Venezuelan oil thus serves as a strategic instrument, deployed at a moment when the US wants to shore up weakening global structural power.

3. Current instability in Iran gives US more bargaining power in the short term, because it unsettles NATO energy markets and disproportionately threatens China, which is heavily reliant on Iranian oil.

4. Venezuela is low-risk geopolitically: condemnation has been rhetorical, with no sanctions or serious retaliation.

5. Oil, in this context, is leverage.

1. The Western Hemisphere

Venezuela is strategically important to the US beyond oil, because US’s traditional sphere of influence and power has been anchored in defending the Western Hemisphere (lots of recent talk on the Monroe Doctrine). Just a quick recap: the US prioritized the Pacific during the Cold War, deploying the bulk of its navy there despite Soviet Power in Europe, and Wilson entered WW1 due to an added threat via Mexico, and not solely Europe alone.

But increasingly, US influence in Latin America has eroded steadily over the past two decades. Many countries that the US considers competitors have strategically (and diplomatically) expanded their presence in Latin America, investing in ports, telecoms, and critical minerals mining in LATAM. China, for example, is projected to become Latin America’s largest trading partner by 2035, and controls ports at both ends of the Panama Canal, and Iran can transit that canal, despite US sanctions.

From this perspective, losing hemispheric influence is not merely a regional decline, but undermines US’s primacy. Venezuela allows the US to prevent the consolidation of a rival bloc in the Western Hemisphere, and cling on to what they can, albeit with brute force.

2. Energy stabilizer, NATO, and the US dollar

Before the bombing/military strikes in Venezuela happened, US oil production was projected to decrease in 2026.

Source

A sustained contraction, even if sufficient for domestic use, would reduce American relevance in Eurasian energy politics and increase exposure to Middle Eastern supply shocks.

Put another way, Venezuelan oil is important now, because it increases Washington’s capacity to absorb energy volatility at time where oil production is projected to decrease, and in doing so, allows the US to tolerate more friction in alliances, e.g. NATO. Oil not only keeps the US dollar relevant (the petrodollar system) but has allowed the United States to sustain trade deficits, finance military power, and anchor alliance systems such as NATO.

NATO allies may bristle at US pressure over Greenland, but their energy dependencies limit the durability of resistance. Many NATO countries rely heavily on imports transiting the Strait of Hormuz and the Suez Canal. Even NATO member states that have diversified energy supply rely on a stable Middle East to ensure price stability. Venezuelan oil is a means to an end in this regard.

3. Iran and the geography of vulnerability

The US’s most glaring immediate weakness in power lay in the Middle East. Iran, in particular, has the potential to inflict significant damage. The country lines the eastern shore of the Strait of Hormuz, where around 20% of the world’s oil supply travels each day.

The oil mostly goes to Asia and Europe, not to the US, but any instability in Iran could very easily untangle alliances that the US cares about. Equally important is that instability in Iran could easily shake global markets, lead to higher inflation, consumer prices, and changes in monetary policy. Many NATO countries often oppose joint US naval operations in the Gulf. So we know that even though they may be considered US allies, there is a limit to NATO alliances when energy is in the picture.

The Middle East is where US power is most politically isolated, and with Venezuelan oil, the US has made the Persian Gulf less geopolitically central. (At the same time, instability in Iran and American efforts to shape its political trajectory intersect directly with China’s energy security, given Beijing’s heavy reliance on Iranian oil.)

4. Venezuela, the low-hanging fruit

This is pretty self-explanatory. Since the US captured Maduro, responses have been muted, outcome wise. No sanctions nor retaliation? Now imagine if any other country in the world does that..

All this to say that Venezuela is a low-hanging fruit to fulfil the US’s agenda. From online responses it seems that Venezuelans are happy-ish, the US asserts itself in line with its ‘’America First” image, Trump has an additional negotiation tool with NATO and show his domestic supporters that he is a strong man, and the US postured towards Russia and China without retaliation. And of course, the US now has additional access to oil, perceived or otherwise.

All in one fell swoop! Very Rubio-esque, very efficient. As the saying goes, 一石二鸟.

5. Oil not as an end in itself

As Krugman and others have pointed out, Venezuelan oil is not economically critical to the US. 50 million barrels of oil, as Trump has claimed will be ‘turned over’ to the US, amounts to merely 2 days of use in terms of US oil consumption. Its market value is in the range of $2.8 billion, a tiny fraction of US GDP. It is also costly to restore and invest in Venezuelan oil infrastructure, as Trump’s meeting with oil executives have demonstrated, which has declined over the years. Global markets also did not particularly react to the capture of Maduro.

But with 298 billion to 303 billion barrels in its oil reserves, even if not accessed, the US will have large geopolitical sway if it is perceived to have huge quantities of it. And that gives it enormous leverage in the short-term.

Grasping for power

Long story short, recent US actions seem to me less a grab for oil than an attempt to reshape the geopolitical conditions under which power is exercised in the era of geopolitical shifts amidst China’s impending rise.

Trump has always considered China as the US’s largest geopolitical problem. At the same time, China has increased its influence in areas that worries the US: the Middle East, and the Arctic.

In the Middle East, since acquiring the port at Gwadar, China can monitor shipping through the strait of Hormuz, and has conducted joint naval exercises with Iran near the Strait of Hormuz and trilateral exercises with Russia and Iran. Washington may perceive it as a risk to let China become the predominant naval presence there, because US influence will further erode.

In Greenland, China has also strategically and diplomatically (the US could take a leaf) attempted to invest in airports, mining, and infrastructure. Most notable is the Kvanefjeld project in Greenland involving rich rare earth element (REE) deposits, critical for the green energy transition, and where Chinese companies have been involved. With climate change, the Arctic is incredibly important as new sea routes open, where it will become a future energy and shipping corridor. If China further expands its influence there, the US will have weakened control over the North Atlantic.

Despite all that Washington has said and done re: Venezuela and Greenland, I think it just reflects deep insecurity about their global position vis-a-vis China.

In grasping for power at the seams, the US has made its insecurity increasingly visible.