What if?

Diogenes

Diogenes

Nemo me impune lacessit
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What happens if the United States stops exporting oil? A speculative analysis ...

Before 2015, the United States did not allow the export of crude oil. The ban had been in place for decades. The oil industry lobbied Congress to lift it, and Congress did. Since then, American crude exports have grown to roughly 4 million barrels per day... enough to fuel the gasoline consumption of 100 million Americans. That oil now flows outward to global markets, where it helps stabilize Brent prices and keeps the international supply chain from fracturing completely.

What if that valve closed?

The administration has denied considering it. The oil industry is preemptively fighting the idea. But the strategic logic is so clean, so perfectly aligned with every other move this administration has made in the last 67 days, that it demands examination... even as speculation.

I. The Numbers: What America Has and What the World Needs

The United States produces approximately 24 million barrels per day of total petroleum and other liquid fuels, according to the EIA’s 2026 forecast... more than Saudi Arabia and Russia combined, representing over 22% of global output. That total includes 13.6 million barrels of crude oil, roughly 7 million barrels of natural gas plant liquids (ethane, propane, butane... real hydrocarbons that heat homes and feed petrochemical plants), over 1 million barrels of refinery processing gain, and biofuels. Of that total, the U.S. exports approximately 4 million barrels per day of crude oil. Those 4 million barrels are what an export tariff or ban would target.

Right now, Brent crude trades above $100 per barrel. WTI, the American benchmark, trades slightly below. The spread is narrow. Both benchmarks are elevated because the Strait of Hormuz is effectively closed, removing roughly 20 million barrels per day of normal flow from the global system.

An export tariff or ban on American crude would change that arithmetic overnight. Four million barrels per day pulled off the global market and trapped inside the domestic system. For context, that’s roughly equivalent to the entire daily output of Iraq.
 
II. The Domestic Cushion - Why America Can Absorb It

The Jones Act was waived for 60 days on March 18, unlocking the global tanker fleet for domestic port-to-port shipping. Venezuelan crude sales to U.S. refiners were opened through a new Treasury license for PDVSA. The U.S. Strategic Petroleum Reserve, which held 415 million barrels as of February, has begun releasing 172 million barrels as part of the IEA’s coordinated draw.

Domestic crude production is running at 13.6 million barrels per day, with EIA projecting it could rise to 13.8 million.

And on March 10... the same day as the Kharg Island strike... Trump announced that America First Refining is opening the first new U.S. oil refinery in 50 years in Brownsville, Texas, calling it a “$300 billion deal” that “will fuel U.S. markets.”

America has the production... 13.6 million barrels of crude, 24 million total petroleum liquids. It has the refining capacity... 18.4 million barrels per day, the largest in the world, with more being built.

It now has the tanker access.

It has the Venezuelan supply.

The only thing connecting American energy prices to the Hormuz crisis is the export pipeline. American crude flowing outward links WTI to Brent; cut that link and American prices decouple from the global crisis entirely.

The Strait of Hormuz becomes, in the most literal sense, someone else’s problem.
 
III. The Squeeze - What It Does to Europe

Europe is already in crisis. TTF natural gas is at roughly $16 per MMBtu... five times the American price. European refineries are running on crude that has to be routed around the Cape of Good Hope because Hormuz is closed and the Red Sea remains dangerous. Insurance costs are astronomical.

Charter rates have hit record levels. EU gas inventories are dangerously low... around 39% full in early February, with Germany at 30%, France at 29%, and the Netherlands at 23.5%.

Every NATO ally that Trump asked to send ships to Hormuz said no. Germany said no military participation. The UK said it would “not be drawn into the wider war.” Japan ruled out sending ships. Australia said no. Spain, Luxembourg, Romania, Poland, Sweden... all no.

If American crude exports stop or slow, the approximately 4 million barrels per day that currently reaches global markets disappears from the supply pool. Brent goes higher. European energy costs go higher. And the concessions Trump has been seeking... the IMO carbon tax exemptions Europe blocked, the Greenland negotiations, the tariff concessions that SCOTUS stripped, the SHIPS Act cooperation that Congress stalled, the CMA CGM commitment that fell through... become harder to refuse with every dollar added to European energy bills.

An export curb doesn’t punish Europe with a tariff the Supreme Court can strike down. It punishes Europe with physics. You can litigate a tariff. You can’t litigate a missing barrel.
Click to expand...
 
IV. The Vise - What It Does to China

China consumes 15 million barrels per day and produces just over 5 million.

That 10 million barrel per day deficit has to come from somewhere.

Before the war, 5.35 million barrels per day of it flowed through Hormuz. That figure has collapsed to 1.22 million.

Chinese buyers are paying above Brent benchmark for Canadian crude for the first time in recorded history. China holds 1.2 billion barrels of reserves... roughly 108 days of import cover at current consumption.

The Trilateral Pact signed January 29 between Iran, China, and Russia promised alternative financial systems and a new multipolar order. It has delivered nothing.

China didn’t send a warship.

Russia condemned a projectile near its own Bushehr investment and did nothing else.

Iran is offering yuan-denominated passage through a waterway it can barely control.

If American crude leaves the global market, the supply pool China is drawing from shrinks further. Every barrel that stays in America is a barrel China cannot buy from a third-party seller who would otherwise be purchasing American crude.

The reserves burn faster.

The 108-day clock accelerates.

And the leverage Trump holds over the postponed Xi summit (delayed specifically because of the Hormuz dispute) compounds.
 
V. The Tariff Replacement - Why Energy Is the New Trade Weapon

On February 20, the Supreme Court ruled 6-3 that IEEPA does not authorize the President to impose tariffs.

An estimated $160 billion in annual tariff revenue disappeared. Trump pivoted the same day to Section 122, imposing 15% global tariffs... but those are capped at 150 days and require Congressional extension. His most powerful trade tool was taken away by the courts.

A crude export tariff operates under different legal authority.

It does not rely on IEEPA.

It does not require Congressional approval for emergency implementation, and it accomplishes what tariffs would have accomplished: forcing compliance from countries that depend on the American-anchored global system, through a mechanism the Supreme Court has not touched.

Trump said it himself on Truth Social… “The United States is the largest oil producer in the world, by far, so when oil prices go up, we make a lot of money.”

That is the statement of a president who sees high global energy prices as leverage, not as a problem. Domestically, gas prices hurt voters. But an export curb solves that by decoupling WTI from Brent... American prices fall while global prices rise. The voter feels relief. The competitor feels pain.

The leverage builds.
 
VI. The Risks - Why the Industry Opposes It

The oil industry is against it.

The American Petroleum Institute’s CEO Mike Sommers called export restrictions “bad policy ideas,” arguing that “pulling American oil off the world market would further tighten global supply and could trigger cascading economic consequences for consumers.”

The practical objections are real.

Most Gulf Coast refineries are optimized for heavy sour crude, not the light sweet crude America produces in abundance.

An export ban could create an oversupply of light crude domestically while not solving the refinery configuration mismatch.

A Federal Reserve research report found that lower domestic prices would eventually lead shale producers to cut output, undermining the production advantage, and domestic fuel prices might remain elevated as long as refiners can still export refined products.

These are legitimate concerns.

An outright ban is a blunt instrument with unintended consequences.

But a tariff - a calibrated export tariff that raises the cost of selling American crude abroad without banning it entirely - is a scalpel.

It widens the WTI-Brent spread without crashing domestic production.

It makes American crude marginally more expensive for foreign buyers while keeping it cheap at home, and it generates revenue for the Treasury at a moment when $160 billion in tariff income has vanished.
 
VII. The Pattern - Why It Fits

Look at the sequence.

Every move this administration has made since February 28 has followed a single logic: decouple America from global energy dependency while increasing the world’s dependency on American goodwill.

The DFC insurance facility made the U.S. government the insurer of last resort for Hormuz shipping... with deliberately incomplete P&I coverage that keeps the Strait from fully reopening.

The Jones Act waiver unlocked domestic tanker distribution.

The Venezuela OFAC licenses opened 303 billion barrels of reserves to American companies while explicitly blocking Chinese and Russian entities.

The Navy is slow-walking escort operations while the leverage clock runs.

Israel struck the South Pars gas field - the largest on earth - widening the natural gas price gap between America and everyone else.

A crude export tariff is the last valve in this system. It seals the closed loop.

America produces enough, refines enough, and would keep enough at home to make the Hormuz crisis entirely a European and Asian problem, while holding the option to reopen exports as a concession once the other side comes to the table.

The administration says it’s not considering this. Maybe it isn’t. But the architecture is built for it. Every prerequisite is in place. The Jones Act is waived. Venezuelan crude is flowing. The tanker fleet is unlocked. The only thing left is the valve. And the hand is on it.
Click to expand...

This is speculative.

The administration denies it.

The industry opposes it.

The risks are real.

But the strategic logic is so perfectly aligned with every other move in the last 18 days that ignoring it would be analytical negligence.

The question is not whether the United States can close this valve.

It can.

The question is whether the leverage it creates is worth more open or closed, and that answer depends entirely on what Europe and China are willing to give up to keep American oil flowing to their shores.

The Strait of Hormuz is someone else’s chokepoint. American crude exports are ours.
 
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Now a hypothetical . . .


Protection and indemnity insurance, more commonly known as P&I insurance, is a form of mutual maritime insurance provided by a P&I club.

They insure roughly 90% of the world’s ocean-going tonnage.

Without their coverage, ships can’t sail.

Port authorities won’t let them dock.
Banks won’t finance the cargo.
Charterers won’t book the vessel.

The entire system, from loading berth to discharge terminal, is underwritten by a chain of contracts that begins with a club in London, Oslo, or Tokyo.

When the clubs pulled war risk extensions on March 5, that chain broke.

Not for a few ships. For the global fleet.

War risk premiums jumped from 0.25% to 1% of hull value, renewable every seven days.

VLCC (Very Large Crude Carrier) charter rates quadrupled to nearly $800,000 per day.

Over 1,000 vessels are now trapped in the Persian Gulf with nowhere to go.

Every TV analyst is talking about minesweepers and carrier strike groups. The binding constraint on Hormuz in the first week was not a minefield. It was spreadsheet in London.

Then Trump did something remarkable.He ordered the U.S. International Development Finance Corporation (DFC) to create a $20 billion maritime reinsurance facility, with Chubb as lead underwriter, making the United States government the insurer of last resort for Gulf shipping.

The DFC facility, coordinated with CENTCOM and Treasury, offers hull, machinery, and cargo coverage on a rolling basis to eligible vessels.The United States now controls the on/off switch for the Strait of Hormuz. Not through naval firepower. Through insurance.

But here’s the tell: The DFC covers hull, machinery, and cargo.

It does not cover P&I liability: pollution, crew injury, third-party claims.

Without liability cover, most shipowners still won’t sail.

The facility is deliberately incomplete.

If the White House wanted the Strait fully open tomorrow, it could expand the DFC facility to cover P&I liability with one directive. It hasn’t.

That gap is not an oversight. It’s a strike price on an option the administration is choosing not to exercise. Yet.


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