It has been a nine-day — correction, three-day — wonder. The latest fall in prices came to an abrupt halt yesterday, and oil moved north. Of course, betting on continuously higher prices would be foolish, but equally, expecting a prolonged drop below $80 is not a foregone conclusion either.

There is no denying that talks to at least partially reopen the oil floodgate, aka the Strait of Hormuz, have not been as intense in the last six months as they are now. Nevertheless, behind the headlines, the details remain patchy. Mediation efforts, including the Qatari PM’s visit to Tehran, are accelerating. It is a welcome development. Traffic through the Strait is reportedly picking up, and, following a ship-to-ship transfer, two Saudi supertankers are heading to China. Product inventories in Singapore reached a three-week high this week, while sticky inflation and rising interest rates paint a somewhat gloomy economic picture, firmly inauspicious for oil demand.

Yet, notwithstanding the tentative progress in the Iran-Oman talks, it is not clear what Iran’s conditions, including transit fees, are in the event of an agreement. Freight rates remain elevated, and insuring cargoes in the region also costs shipowners dearly. The White House poured cold water on any hope that the US would support the joint Iranian-Omani effort by indicating no inclination to revive the June MoU.

Although support from Heating Oil has been temporarily withdrawn (and the gap happily filled by RBOB), the Russian diesel export ban is squeezing supply in Europe, data provider OPIS reports, while product inventories in the US and the ARA region continued to draw. There are probably as many pros to be sanguine about resolving the Middle East crisis as there are cons. Therefore, and justifiably, the oil fraternity remains persistent in its myopic approach of refusing to commit itself to either direction for the longer run.
 

A Genuine Oil Hegemony

During his nine-month visit to the United States nearly 200 years ago, the French nobleman Alexis de Tocqueville concluded that the country was on its way to becoming the world’s most powerful nation because its society was egalitarian, owing to the absence of a hereditary aristocracy and feudal roots. As such, it featured an exceptional ‘equality of conditions’, the precondition for an innovative nation destined to grow from strength to strength in every aspect of society.

It was an admirably astute observation. After WWII, the US established itself as the largest and most influential economy in the world. This No. 1 position naturally entails substantial energy consumption, a title that the country held for over 100 years, until China overtook it 16 years ago. However, the US retained its position as the world’s largest oil consumer. Simultaneously, a seismic change, which has reshaped efforts to transition from fossil fuels to renewable energy and influenced foreign policy, got underway almost 20 years ago.

The country produced 5 mbpd of crude oil in 2008. It accounted for about 9% of total supply, while its share of the demand pie stood at 23%. Then the shale sector emerged, and US crude oil and natural gas production was set on an uncompromising upward trajectory. Fast-forward 18-odd years, and you will find that the United States, producing 13.69 mbpd of crude oil and supplying 21.85 mbpd in total, was responsible for 23% of global supply in 2Q this year. At the same time, it has given up only a minuscule share of global demand (21% in 2Q 2026, according to the IEA), while the absolute figure has grown.

The major implication is growing oil independence and a more pronounced role in international oil trade as an exporter. With crude oil production growing, the US now relies much less on foreign oil, both crude and refined products, than before. Its gross crude oil imports have fallen from over 10 mbpd 18 years ago to 6.3 mbpd in the first half of this year. They now amount to a mere 32% of domestic production, less than half of what was required in 2008. Of course, US refiners need specific staples of crude to run efficiently. This is why gross crude oil imports are still comparatively high. Nonetheless, the net figure, after the lifting of the export embargo at the end of 2025, declined to 1.61 mbpd, from over 10 mbpd 20 years ago.

The picture is even more reassuring when products are added to the equation. On a net basis, the US imported over 12 mbpd of crude oil and refined products from abroad towards the end of the 2000s, more than 2 mbpd of which were products. With the rise of US shale production, this figure gradually but unstoppably approached zero, and, for the first time in 2011, turned negative on an annualised basis (-438,000 bpd). The US became a net exporter of products, and it has never looked back. Over the past 16 years, its net product exports have increased on 14 occasions. According to the latest monthly EIA data, covering the January-May period, the country’s net product shipments overseas stood at 5.8 mbpd this year, a swing of 8 mbpd over the last 20 years. Combined crude oil and product net exports for the same period reached 4.23 mbpd.

There are several definitions of oil independence, but whichever way one looks at it, the changes are truly earth-shattering – metaphorically as well as literally. US oil supply, defined as the total volume of oil made available, including production, inventory releases and biofuels, as a ratio of domestic demand, has risen from 39% in 2008 to 106% in 2Q 2026. The proportion of net imports to domestic demand has flipped from close to 60% to -21%, with the US now a net exporter.

This vibrant US oil sector explains why, rightly or wrongly, the US Administration does its best to impede the energy transition, advocates the continued use of oil and, from the perspective of national energy security, considers it less risky to enter into conflicts engulfing major oil-producing regions.
 

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