Who Controls the World’s Fuel? Oil Wars, Economic Sanctions and the Battle for Energy Security

Washington wants fuel shortages to break Tehran. History suggests the weapon rarely stays pointed in one direction.

Scott Bessent had blunt advice for ordinary Iranians this week: start stocking up on heating fuel. In an interview with Iran International, the US Treasury Secretary predicted a big heating-fuel shortage this winter and said Iran’s economy would shrink by more than 25% in the year to March 2027, citing falling oil production and a lack of foreign currency.

Tehran’s answer came from Hamid Bovard, who took over as acting oil minister this month. In a post on X reported by Tasnim News Agency, he said that while gas diplomacy was under way in Moscow, the United States was out searching for diesel. Bessent, he suggested, should save his stockpiling advice for Americans, who he said had been paying for Trump’s foreign adventures for months.

It wasn’t an empty jab. Earlier this month, Bessent urged European countries to release extra diesel supplies so American farmers and truckers wouldn’t bear the burden of rising prices. Then on 9 October, President Donald Trump announced a deal to buy diesel from Russia, reversing years of pressure on Moscow to bring down fuel prices before the midterm elections. The United States hadn’t imported Russian oil or gas since 2022.

Both men are making claims, not presenting settled evidence. But the exchange raises the question at the heart of this war, and of a century of energy politics: can a country use fuel to weaken an adversary without paying for it at home?

The answer matters far beyond Washington and Tehran. Energy keeps modern economies running, yet the oil, refineries and shipping lanes behind it are unevenly spread across the map. That imbalance has turned dependence into leverage again and again. To see where this confrontation is heading, it helps to see how we got here.

Who Controlled the Oil?

Oil didn’t become a weapon simply because some countries had it. It became one because industrial economies came to depend on supplies they couldn’t control.

Through the twentieth century, oil moved from a commodity to a strategic necessity. It powered navies, armies, factories and the cars that reshaped cities. Access to it stopped being a commercial question and became a matter of national security.

For decades, a handful of Western oil companies held the concessions, set the terms and took much of the revenue. Producing countries pushed back, demanding a larger share of the wealth beneath their own soil. Iran was among the first to force the issue. In 1951 it nationalised its oil industry, taking control from the British-owned Anglo-Iranian Oil Company. The fight that followed set resource sovereignty against foreign commercial interests and great-power influence, a tension that never fully went away.

By the early 1970s, the balance had shifted. Producer states had more control over output and pricing, and consumer countries had grown more dependent than ever. That combination was waiting for a trigger.

1973: When a Regional War Shook the World

The trigger came in October 1973. During the Arab-Israeli war, Arab oil producers cut output and imposed an embargo on the United States and other countries that backed Israel. It lasted until March 1974, and in that time oil prices rose from under $3 a barrel to $11.65.

The shock showed up far from the battlefield. American drivers waited in long queues for petrol. Governments rationed fuel and lowered speed limits. Businesses faced soaring costs, and inflation combined with stagnation in a way economists hadn’t seen before. The State Department’s own history describes the embargo as a severe strain on a US economy that had grown increasingly dependent on foreign oil.

The crisis changed how rich countries thought about energy. In 1974 they set up the International Energy Agency to coordinate emergency stocks, the same body that would release a record 400 million barrels during the current war.

The deeper lesson wasn’t about shortages. It was about how a foreign policy choice in one capital could travel through the global economy and land on household budgets everywhere. And the pain didn’t stay with the intended target. When a commodity runs through every economy, squeezing its supply squeezes everyone.

1979: Iran’s Revolution and the Second Shock

Five years later, a supply shock arrived without any embargo at all. Strikes spread through Iran’s oil fields in late 1978, and as the revolution unfolded, Iranian output fell by 4.8 million barrels a day by January 1979, around 7% of world production at the time. Panic buying and hoarding made it worse, and prices more than doubled.

The lesson was different from 1973. Energy security could collapse because of upheaval inside a key producer, not only because of a deliberate decision to withhold supply.

The revolution also reshaped Iran’s relationship with the West, and from then on its oil exports became tangled up with sanctions and foreign policy. It wasn’t the sole cause of decades of US-Iran hostility, but it was a turning point.

Iran’s geography matters as much as its reserves. It sits on the Strait of Hormuz, the narrow passage that carries much of the Gulf’s oil to the world. That’s why the difference between producing oil and getting it to market is so important. A country can keep pumping crude while being unable to sell it, and a threat to a shipping lane can shake prices even when the oil fields are untouched. The current war shows both at once: the IEA estimates the peak supply loss at more than 12 million barrels a day, larger than the 1973 and 1979 shocks combined.

From Embargoes to Sanctions: How Energy Pressure Evolved

The 1970s showed what supply shocks could do. The decades since have shown that the weapon doesn’t have to be a closed tap. Modern energy pressure works through the systems oil moves through.

Sanctions and export bans. Governments can restrict who buys, sells, finances or ships petroleum. That can cut an adversary’s revenue, but it only works as well as it’s enforced, and only until the target finds other buyers or routes.

Maritime restrictions. A country can sit on vast reserves and still be choked if its ports and tankers can’t move. That’s the logic of the current US blockade. Iran’s central bank chief has said it drove crude exports to zero.

Financial pressure. Oil trade runs on payments, insurance, shipping finance and access to hard currency. Block those, and trade stalls even when the oil is there. Bessent’s warning about Iran’s foreign-currency shortage is about exactly this lever.

Blowback. The country applying the pressure can feel it too, through higher prices, nervous markets and angry consumers. How much depends on spare supply, strategic reserves and how long the disruption lasts.

Modern energy coercion, then, isn’t about switching off a supply. It’s about trying to control the systems through which energy is produced, financed, shipped and sold. And control over a system is never total.

America, Russia and Iran: Three Kinds of Energy Power

The three countries at the centre of today’s energy politics hold very different cards, and each has a weakness the others can press.

The United States: sanctions power, domestic exposure

America produces enormous amounts of its own energy, but its real reach comes from its control over global finance and its ability to enforce sanctions. That’s what makes the blockade and the financial pressure on Iran possible.

Yet domestic production doesn’t wall Americans off from world prices. Fuel is priced globally, and a war that tightens supply anywhere raises pump prices at home. The Russian diesel deal is the clearest proof. To ease prices before the midterms, Washington relaxed pressure on one adversary to keep up pressure on another, and Bessent defended the dealas good for Americans struggling with diesel costs. The question for Washington is whether its pressure on Tehran can deliver results before the costs at home become politically unbearable.

Russia: leverage that cuts both ways

Russia’s experience after its 2022 invasion of Ukraine shows energy interdependence working as a weapon in both directions. In 2021, Russia supplied around 45% of the EU’s gas imports and close to 40% of its total gas use, according to the IEA. Moscow’s supply cuts sent prices soaring, but Europe responded by finding new suppliers, building import terminals and cutting demand, and Russia lost its most valuable market.

Now the pressure has turned again. Ukrainian drone strikes on Russian refineries have cut deep into output, with the IEA estimating that Russian diesel production has fallen by about 30%. Even so, Moscow has found a way to turn a global shortage into diplomatic gain with Washington.

There’s no evidence that Russia is coordinating its energy policy with Tehran. But reports suggest that before Iran’s fuel crisis deepened, Russian supplies covered part of Iran’s import gap. Moscow is selling to both sides of a war it isn’t fighting.

Iran: reserves without routes

Iran pairs large oil and gas reserves with a commanding position on the Strait of Hormuz. That gives it leverage few countries can match. But leverage isn’t control.

The blockade has hit Iran at both ends. Its exports have collapsed, and at home, fuel consumption has outrun refining capacity, leaving it dependent on imports it now struggles to get. The same disruption Tehran uses to raise costs for Washington is draining its own economy and the economies of its neighbours.

That’s the central tension of energy power. A country can hold a powerful lever without being able to control what happens when it pulls it.

How a Distant War Reaches Ordinary Households

Most people will never see the Strait of Hormuz. They’ll feel it anyway.

When oil supply or shipping is disrupted, the cost of getting and moving fuel rises. That ripples outward through:

• petrol and diesel prices at the pump
• road freight, buses and public transport
• airfares and shipping charges
• factory production costs
• fertiliser, farming and food distribution
• inflation and what household incomes can buy

None of this is automatic, and no two countries feel it the same way. Taxes, subsidies, exchange rates, stockpiles and government policy all shape how much of a global price spike reaches the consumer.

It also matters what kind of fuel is short. Crude oil has to be refined into petrol, diesel and heating oil. A country can have plenty of crude and still run short of a particular fuel if its refineries can’t keep up. That’s Iran’s problem today, and it’s why America went looking for diesel in Moscow rather than crude. Natural gas is a separate market again, with its own pipelines, terminals and storage.

So energy security isn’t just a question of how much oil a country pumps. It depends on its refineries, the variety of its suppliers, the safety of its shipping routes and how much financial room its people and government have to absorb a shock. That’s why the same crisis can be an inconvenience in one country and an emergency in another.

What History Tells Us About the Next Crisis

Fifty years of oil shocks point to three lessons.

Dependence is vulnerability. Countries can soften it with diverse suppliers, strategic reserves, better infrastructure and alternative energy. The IEA’s record 400-million-barrel release this year is the system built after 1973 doing its job. But diversification takes years, and no country fully escapes world markets.

Pressure isn’t the same as compliance. Sanctions and blockades can impose huge costs, as Iran’s empty fuel stations show. Whether they change a government’s behaviour depends on its priorities, its ability to adapt and how long the other side can keep paying for the pressure.

Resilience needs diplomacy. Navies can escort tankers and reserves can cushion a shock. Neither replaces the political work of preventing conflict and keeping trade routes open.

Pakistan’s case: regional peace as a development agenda

Pakistan’s diplomacy in this war rests on a simple argument: in this region, energy security is food security, and food security is the foundation for everything else. South Asia alone is home to around a quarter of the world’s population, and many of its economies are still fighting to recover from successive shocks. When Hormuz is blocked, the damage isn’t measured only in the price of a barrel. The strait normally carries around 30% of global urea exports, and the UN Food and Agriculture Organization has warned that its closure could trigger a severe global food price crisis. For farmers across South Asia, the Middle East and Africa, a closed shipping lane means costlier fertiliser this season, smaller harvests the next and higher food prices for families who can least afford them.

That’s why Islamabad has argued that a durable settlement serves the whole region, not any single capital. It helped broker the Islamabad Memorandum of Understanding that paused the fighting, and it has kept channels open to Washington, Tehran and the Gulf at once. As an energy importer whose own petroleum bill reached about $8.9 billion in the first nine months of FY2025–26, Pakistan knows the cost of instability as well as its neighbours do. But the case it makes is wider. Secure shipping lanes are what allow the region’s struggling economies to feed their people, attract investment and realise their potential. In that view, stability isn’t simply the absence of war. It’s the precondition for development.

The contradiction at the heart of energy power

Oil builds wealth, funds militaries and gives producers a voice in world affairs. Sanctions can drain adversaries, and control of shipping lanes adds further leverage. But none of these tools works in isolation. The same global market that lets energy become a weapon also carries its costs to consumers and governments with no say in the original quarrel.

History suggests governments will keep using energy as an instrument of foreign policy. The real question is whether they can build enough resilience and restraint to stop every regional conflict from becoming a global economic crisis. Energy gives states power because the world depends on it. That same dependence makes every attempt to weaponise fuel a test of the entire global economy.