Why Trump's Oil Cartel Ambitions Against China Are Doomed to Fail
President Donald Trump appears to be attempting something unprecedented in global energy politics. He seems to be assembling an informal oil cartel with enough power to challenge OPEC's dominance. This move aims to gain strategic leverage over China, America's primary geopolitical rival and the world's largest oil importer.
The Cartel Vision
Trump's strategy hinges on gaining influence over major oil-producing nations. The capture of former Venezuelan President Nicolás Maduro in early January gave the US significant sway over Venezuela's substantial oil reserves. Combined with potential control over a post-revolution Iran, this could theoretically give the US influence over approximately 42% of global oil production.
China happens to be the biggest importer of both Venezuelan and Iranian oil. This dependency makes Beijing appear vulnerable to American pressure tactics. The vision suggests that by controlling these oil flows, Trump could essentially hold a kill switch for China's energy-importing economy.
Historical Lessons in Oil Politics
History teaches us that such ambitions rarely succeed. Diplomatic actions might change national leaders, but they rarely alter fundamental relationships between oil producers and their customers. These trade relationships actually shape diplomatic alliances more than political maneuvers do.
Since World War II, politicians attempting to control global oil flows have almost always failed. The 1973 Arab oil embargo stands as a rare example of producers trying to use oil as a political weapon. Even that attempt failed to achieve its stated goal of ending Western military support for Israel.
Oil markets demonstrate remarkable resilience against political manipulation. The United States continued importing Iranian oil intermittently for eight years following the Islamic Revolution. The European Union will not completely phase out Russian gas imports until late next year, five full years after Russia's invasion of Ukraine began.
China's Strategic Positioning
China plays a central role in both Venezuela's ongoing drama and Iran's geopolitical calculations. Beijing's relationship with Tehran is particularly robust, built on multiple layers of cooperation.
The two nations participate in joint military exercises. They signed a significant pact in 2021 outlining $400 billion in potential Chinese investments over 25 years. This agreement provides Iran with a crucial economic lifeline amid international sanctions.
Chinese President Xi Jinping actively supports Tehran's Global South ambitions. He encouraged Iran's entry into the Shanghai Cooperation Organization in 2023. China also backed Iran's accession to the expanded BRICS bloc. Just last week, warships from Iran, China, South Africa, and the UAE conducted joint naval exercises off South Africa's coast.
Beijing approaches its relationship with Tehran with clear pragmatism. Chinese officials consistently emphasize stability in Iran but offer little beyond verbal concern regarding internal protests. This measured approach reflects China's broader foreign policy strategy.
Market Realities Trump Politics
Commodity markets are already adapting to potential political shifts. Rather than being shut out of Venezuela's post-Maduro oil exports, China is being positioned as a principal customer by major traders like Trafigura Group and Vitol Group.
Russia remains the only country supplying more than 10% of China's crude oil. Most other major suppliers are emerging middle powers unlikely to follow American directives easily. This diversification protects China from over-reliance on any single source.
Energy transition provides another layer of security. Electric vehicles will eliminate approximately 1.76 million barrels of Chinese oil demand this year alone. This reduction roughly equals all oil imports from Iran and Venezuela combined.
The Fundamental Nature of Oil Markets
Oil possesses unique characteristics that defy political control. This slippery commodity always finds its market level. It seeps through the narrowest cracks to connect willing buyers with willing sellers.
Trump's foreign policy swagger has inadvertently helped China's global positioning. Beijing can portray America as an unreliable and predatory force while presenting itself as the rational actor in international affairs.
The fundamental lesson remains clear. Those betting that basic laws of trade and geopolitics have been overturned will likely face disappointment. Oil markets have historically resisted political domination, and current dynamics suggest this resistance will continue.
