Geopolitics and Energy Security

This briefing tracks China's energy demand and import strategy, covering its rise to the world's largest LNG importer in 2021, continued reliance on coal, evolving gas and pipeline infrastructure incentives, and its pursuit of supply diversity amid shifting geopolitical alignments.

This briefing examines the evolving framework of U.S. energy security (spanning import dependency, efficiency, affordability, and infrastructure vulnerability) and the shift toward an active-sovereignty doctrine, tracking the institutions and events that shape national energy policy.

Since mid-2022, U.S. LNG has displaced collapsed Russian pipeline gas in Europe, with U.S. LNG exports rising to 11.7 BCF/d and the European share climbing to 81%; the January 2025 expiry of Ukrainian transit removed a further 1.5 BCF/d, leaving European inventories below trend.

This briefing covers Iraqi and broader Middle East oil supply, including sanctions on Iranian exports of roughly 1.5 million barrels per day, OPEC+ production management, and the security of tanker traffic through the Red Sea and Strait of Hormuz amid regional military conflict.

The war has severed Russian energy flows to Europe: pipeline gas fell from a 2019 peak of 15 BCF/d to under 1 BCF/d, Ukraine ended Russian transit on January 1, 2025, and sanctions plus Ukrainian refinery strikes have reshaped Russian crude and product exports.

The crisis has entered a new phase, and the market's April–June de-escalation has reversed. On July 7 the U.S. revoked a license permitting Iranian oil sales and struck targets inside Iran; three tankers came under attack near Oman. On July 8, President Trump declared the ceasefire over and floated a takeover of the Kharg Island terminal; front-month Brent settled 5.2% higher at $78.02/bbl. Brent settled 9.59% higher again on July 13, at $83.30, and has traded near $85 since — roughly 20% above its July 2 low of $70.65. Reuters reported tanker transits fell to a two-month low by July 13; after the U.S. Navy reimposed its Hormuz blockade, only seven vessels crossed on July 15, down from 13 the day before. The Strategic Petroleum Reserve, the second buffer that had helped cap prices earlier in the crisis, is now materially depleted: 316.5 million barrels as of the week ending July 10 — the lowest level since April 1983. Roughly 73 million barrels remain on the announced IEA-coordinated release; for context this is almost exactly the maximum drawdown allowed under the statutory floor for non emergencies (252.4 million barrels of reserve). At the completion of this release, the SPR will be lower than law has deemed is the minimum threshold for emergencies, just as we are entering phase 2 of the crisis. Both the diplomatic track and the stockpile buffer that anchored the April–June de-escalation have now been substantially withdrawn, which is the basis for characterizing this as a new era of the crisis.

The U.S. Strategic Petroleum Reserve, tapped for a record 220-million-barrel drawdown between November 2021 and March 2023, fell to roughly half of capacity and has since been further depleted following the 2026 Hormuz Strait blockade, constraining emergency import coverage.