I’m at the Warsaw Security Conference, an annual high-level gathering of European and US experts and officials, 12-13 Oct.
Everyone is trying to figure what in the world Trump thinks he’s doing by buying diesel from Putin and claiming Putin agreed to an energy ceasefire. Meanwhile, Russia foreign minister Sergey Lavrov rudely rejected any energy ceasefire, contradicting Trump, saying that Ukraine “does not deserve” a ceasefire.
All indications are that this deal is dead on arrival. I answered several questions and theorized what Trump hopes to accomplish.
It is clear from both European and American security experts and officials here in Warsaw, that no one thinks this “deal” will fly, or that it can really lower diesel prices. Instead, there is deep indignation that the President of the USA would so blatantly undermine the struggle against the Russian petrostate for its aggression in Ukraine. And, there are also market implications beyond the direct undermining Ukraine’s defensive war and allies’ Russian energy sanctions.
[Correction: I misspoke. Russia formerly exported about 800,000, not 800 “million” barrels of diesel per day to Europe, before sanctions cut that off. I also added the NYT quote below before widely sending this post out.] As I post this, I am thinking this is not ONLY about US elections. Why? Trump et al have been claiming for a couple weeks that Russia wants to talk – though there is no public evidence. And Trump’s team are engaged in other, similar maneuvers:
Offering Moscow to reopen the Nord Stream pipelines under ownership of a US firm. This is an old idea Trump et al had dropped by ca. April 2025, when it became obvious that enticing Putin with big deals and investments was not going to sway him to end his war in Ukraine. (This move has the German AfD excited, but they’re not significant players here.)
Trump’s negotiators have also offered Moscow a that some western firm(s) could purchase Russia’s sanctioned Lukoil oil-and-gas infrastructure located mainly in Europe, which can no longer be used by Lukoil due to US sanctions,
Plus, there is this unrealistic diesel deal, which Trump clearly hopes will make US voters think he is getting fuel prices down before November elections. I say “unrealistic” because, if Russia actually had significant extra diesel to sell, it would not have banned exports of diesel for many months while its refineries burn due to Ukrainian drone hits.
And now (10Oct26 addition), there were earlier attempts, in September, also to bribe Putin to end the war. Here is the NY Times on what happened in NYC on the sidelines of the General Assembly opening:
“…, when the Trump administration opened the latest diplomatic track on the sidelines of the U.N. General Assembly in late September, Ukrainian officials were startled by how far Mr. Kushner and Mr. Witkoff went in their offerings to Russia. According to officials familiar with the discussions, who spoke on condition of anonymity to discuss confidential diplomatic talks, the Americans put three lucrative economic incentives on the table to coax Moscow into a limited cease-fire, either on energy infrastructure or at sea.
“Washington floated releasing billions of Russian sovereign assets immobilized in the West. The money, the officials said, was viewed as an upfront incentive for partial truces, not a reward for their enactment. This revived a proposal from last year to release funds to Russia. Then, the suggestion was to release up to $100 billion.
“The Americans also revisited a plan to sell off parts of the Russian oil giant Lukoil in a multibillion-dollar deal that would go to a group of Middle Eastern investors, including some with business ties to U.S. negotiators.
This is a brief live-on-air commentary just after the G7 announced that it would release 100M barrels of diesel fuel to supply markets that are tight due to the Hormuz crisis. This will go a long way to keep inflation in the US, Europe and Asian allies down, protecting consumers and economies.
While Hormuz is already, as I said, transiting as much CRUDE OIL as before the Iranian regime closed it – i.e., Tehran has lost control of the Straight to the US military, which is successfully escorting ships out even in daylight now.
Meanwhile, the amount of REFINED OIL products flowing out has not yet gotten up to pre-war levels, and so we see the present refined-fuel-market shortages and high prices.
This is part 1.0 of a series on the US-Iran war and the present US global energy offensive. Hormuz developments are altering some elements of the one, “Global Barrel” market-centered collective energy-security model that dates to 1973, and which I named this blog after 15 years ago (after I had apparently coined that name).
I will have No. 2.0 of this Iran series soon. Here is 1.0, my brief BBC interview of last night, with some comments below here.
This was my fourth interview with BBC Persian Service, London in recent months. It feels important to get things clear when I have the opportunity to speak directly to Iranians or to Ukrainians.
Comments:
The larger USA global oil-sector offensive involves Russia, Iran, Venezuela, India, and other countries. I’ve seen these each as USA “shaping operations” aimed at preparing the energy landscape favorably to the US and its allies before any future armed conflict with China might begin – or to prevent one.
As I explained earlier (e.g., Jerusalem Post interview), a problem for the Islamic Republic of Iran, in deciding to take control of Hormuz, is that its control can only degrade over time under US pressure.
In the past few weeks, as it’s grip was loosened by the US military, it needed to find a further lever. In the past few weeks Tehran tried two things to reverse its weakening Hormuz position:
I spoke with Al Jazeera on what we know about this new deal between the US and Venezuela.
Trump’s talk of “ownership” is hype aimed at voters. In reality, he is creating reassuring conditions for US firms hesitant to make the big investments required to recover and grow Venezuela’s enormous extra-heavy oil reserves in the Faja del Orinoco region.
In general, the deal seems to follow the outlines of the new hydrocarbon law passed in January by the chavista controlled (and illegitimate) National Assembly. It seems essentially aimed to assure US and other firms that if they invest to develop Venezuelan oil that the US will protect their investments.
US courts will decide contract disagreements, the US Treasury will handle payments, and the US is encouraging repairs and expansion of the dilapidated national infrastructure the oil sector requires as do the people of the country.
PS I spent two years in Venezuela researching “The political economy of Venezuelan oil under Chavismo” as a US Fulbright scholar and visiting professor at CENDES (Centro de Estudios del Desarrollo) at UCV (University Central de Venezuela), and returned a number of times.
I am available for keynotes, seminars, consults, commissioned analysis, and on-air expert commentary.
ENGLISH version. Sky News (UAE), 20 August 2026, Dr. Tom O’Donnell (in Berlin).
I told Sky (UAE), Hormuz is now “a game of chicken” – who can wait the longest and bear the most pain. I tried to look objectively at the two sides.
a) On the Iran side, oil exports are reportedly zero since about 15 July. None of Iran’s oil ships seem to have left Hormuz. A massive accumulation of Iranian oil cargo sits on ships near Malaysia and Singapore, while perhaps 53 loaded ships are stuck in the Gulf due to the US Navy blockade. For a petrostate, this is devastating.
In addition, all Iranian ports are blocked form exporting or importing anything.
What oil can perhaps leave by train to China, say 70,000 barrels per train taking two weeks, is painfully small and costly.
Trump has now declared a push to block any payments or financial transfers to and from Iran. But, if no one is selling anything in either direction, there will be less and less financial flows to block.
For the regime, this is dire. It does not mean Iran will surrender, or even talk, but it is clearly devastating.
TRT-London asked me tonight about oil-market impacts of the deal between Iran and Oman. The title says most of it.
Of course there has been hardship globally with higher energy prices and volatility. However, compared to what would have happened 10 or 20 years ago, this is very significantly smaller.
Oil on average has been up only 25%, and refined products 36% since 28 Feb. (“Why Oil Prices Could Hit a Breaking Point by Year End,” WSJ, Video, 3aug26). Why?
The huge surplus in oil production that was building globally for at least three or four years, plus the constantly falling energy intensity of the economy, plus the high degree of interconnectedness of the one-global-barrel market (the name of this blog for the past 15 years) explains this relatively mild impact thus far. I explained this, and the geopolitical advantage, the long time line, it has given Trump and Washington to go slow and talk a lot as compared to the urgency they would have had earlier.
This is both a case of:
a) More oil being produced globally due to huge advances in petroleum and gas exploration and production (E&P) technologies, Especially in the USA, where a new “Fracking 4.0” stage of the Shale Revolution seems to be underway, one that could boost extraction rates of previously drilled wells by factors of 50-300%, according to various industry tech reports. This is all about US high tech and perfecting of methodologies. (See, Javier Blas, “Shale Oil’s Next Revolution Should Worry OPEC” Bloomberg, 30Nov25).
In addition, there have also been significant tech improvements in deeper offshore production, and in exploration generally, leading to a lot of new, large-sized proven reserves to exploit And,
Maxym Krapivnyy, host at Ukraine’s Kanal24 in Kyiv, spoke with me recently while I was in the USA about: Ukraine’s drone war vs. Russian energy, Russia’s economy, and the USA’s expanding energy war targeting Russia, Iran, Venezuela, and India’s Russian oil imports. I explained that soon, the late-Lindsey Graham’s (R, S.C.) and Richard Blumenthal’s (D., Conn.) “draconian” secondary sanctions bill is expected to be signed by Trump, blocking most Russian oil exports. (Note: the Senate yesterday voted 86-12, to advance the bill. See Blumenthal, here.)
However, Maxym also then asked my view on the likeliness of Putin soon agreeing to serious peace talks. I said I expected Russia would be unwilling to soon end the war even if its forces were pushed back to the Russian border. Why? To admit defeat would devastate Russian credibility as a Great Power in Eurasia and beyond. (See below for a comparison to the USA in Vietnam.)
On the energy war, I stressed that Russia is well known to be a petrostate. Russia’s wealth and capacity to finance aggression abroad overwhelmingly depends on its oil export revenues. Russia’s continued existence as a-petrostate is what the ongoing Ukrainian and USA energy offensives are targeting, on two main fronts.
There are two sides to this energy war. One is the Ukrainian’s kinetic war against Russia’s domestic refineries, the other is the USA and allies’ global sanctions offensive. Both aspects are evolving in breath and complexity:
First, there is the Ukrainian drone and missile campaign, including deep strikes against domestic Russian oil refineries and infrastructure. This has been gaining in success. I pointed out that these attacks have to, however, increase still more, requiting heavier missiles to close refineries and oil export terminal ports for sufficient time to render repairs unprofitable. However, Ukraine is now testing and has begun to produce such heavier weapons, which should be available in the short-to-medium term. We discussed Russia’s refined product supply problems, and what Ukraine must yet accomplish.
Second, oil which increasingly cannot be refined is pouring into Russian export terminals, its big Baltic and Black Sea oil ports. This was already the situation before the Iran war began on February 28. At that time, oil that could not be refined due to drone attacks was being loaded on ships for export. However, with USA sanctions having been intensified, many of these ships had no customers, it had nowhere to go. During the initial phase of the Iran war, the USA allowed India and other allies to purchase this oil (i.e., it unsanctioned oil already loaded on ships without any clear destination) to avert it going to China. This accumulation is apparently again building up, for the same reasons.
the USA now maintains sanctions against Russian oil firms Rosneft and Lukoil, and is working to supply India with non-Russian oil to end its Russian oil purchases, making it harder for Russia to find export markets besides China. However, the reclosing of Hormuz will of course make this somewhat easier for Russia to find buyers.
One problem with giving a quick take on breaking news is that one can forget something. In the interview, I forgot about the US dollar swap line that the UAE had cajoled out of the USA –Trump and Bessent – just before it decided to quit OPEC. Below is the post I immediately wrote with many, IMHO, relevant issues underlying this move. These include national economic and geostrategic differences, often rather sharp, between the UAE and Saudis. However, the swap line issue is now included as point “Zero”.
-0.a- Regarding the swap line: there are so many pieces in motion that we need a litte overview refresher first.
As readers here know, my analysis is that the Trump administration’s sharp moves in the latter part of 2025 against Russian oil exports, together with the Ukrainians’ drone campaign, was at a point where it had begun threatening to force Russian oil exports offline. This, in turn, would force Russia to shut in its old and delicate West Siberian fields. I wrote a detailed study on this. This strategy is exactly like what the USA now openly says it intends to do to Iran by blocking exports from its Kharg Island oil terminal.
The Trump administration claims that the available Iranian storage on the island is near full (Scott Bessent has said this repeatedly). This will force wells to be shut in, likely ruining their productivity for the long term. (However, I believe the Iranian fields are not generally as fragile as Russia’s.)
-0.b- You will recall that Trump constrained and/or convinced India’s Modi to halt Russian oil imports as part of this larger anti-Russian oil campaign to press Putin to end the Ukraine war.
-0.c- However, before the USA proceeded to the next step vs. Russian exports, it went to Venezuela and took control of its oil sector, beginning a comprehensive and very rapid campaign there to bring Venezuelan oil back online.(I spoke at length to Swedish public radio on this again this week,)
The USA has shut off an approximately 2 million battels per day (mbd) stream of oil Venezuela was sending to China, and diverted that oil principally to India. That stream is now part of the USA effort to take care of India during the Iran crisis, so that it does not revert to taking Russian oil.
Pictures taken by the author (T.W.O’D) during a dinner and Q&A with President Ahmadinejad, in NYC during 2010 UN General Assembly opening. Note quote from Ahmadinejad.
Some years ago, I was invited to dinner with President Ahmadinejad in NYC during the annual opening of the General Assembly.
The American think-tanks, consultancies, and x-diplomats present went on and on asking detailed questions about this or that scenario where US experts might work with Iranian experts to observe or limit the Iranian nuclear enrichment program. (I mentioned this 2010 dinner in a later post: “China’s Iran-Oil Import Angst. Part I” Feb 13, 2012.)
It became rather tiresome. Ahmadinejad clearly was growing tired of it. He then asked us,
“If this is all about our nuclear program, then I would like someone please to address here why did the United States side with Saddam Hussein and attack us before there was any issue of a nuclear program?” (Iranian President M. Ahmadinejad, 22 Sept 10, NYC, my notes, T.O’D.)
Everyone ignored his question, and simply kept up with their obviously pre-prepared technical questions. But, what had he meant?
To me, clearly he was referring to the Iran-Iraq war (Sept.1980-Aug.1988), when the USA, at a certain point, decided to take Iraq’s side and, among other things, sunk the entire Iranian Navy in a day, took over air traffic control for the Iraqi air force, started directly advising Iraq on strategy, and etc.
In the end, Iran had to accept an Iraqi peace deal after a crushing defeat facilitated by the USA. I recall now all these details vividly. And, all this was indeed well before any nuclear program.
Aside: I find it disturbing that so many “experts” refer to the supposed “Iraqi defeat” in that war. This was all understood at the time. For example, I quote here from the NYT, (Sec. A, Page 1, of July 21, 1988): Ayatollah Khomeini had personally endorsed the cease-fire demanded by United Nations Security Council Resolution 598. Iran’s supreme religious leader confirmed, for the first time, that he had approved the resolution and added, with his characteristic rhetorical flair: ”Taking this decision was more deadly than taking poison. I submitted myself to God’s will and drank this drink for his satisfaction.” (Emphasis added to the most famous part of Khomeni’s statement. T.O’D.) Further research will quickly show he had to sign as Iran was being soundly defeated at the time, hence the “poison” he had to swallow.
By the way, it is also known, at least in academic circles, from later extensive archival research, that the war with Iraq was planned and instigated by Iran, and that Iraq had attacked in response to Iranian provocations and signs of Tehran’s preparations, after warnings. I am happy to send references to those interested.
What I myself had been arguing, back then, during the Iran-Iraq War Ahmadinejad was referring to, was that the US-Iran confrontation was actually about the US opposition to any country, either from inside the Gulf Region or outside the Region, gaining hegemony over the Gulf and the Straits of Hormuz. This had to do with guaranteeing the free flow of oil, and that the global oil market would be a “real” market that no one state could unduly control. I had even coined a term, “The Global Barrel,” for this market-centered, post-OPEC-nationalizations collective oil-security system, a system initiated by Henry Kissinger in 1973.
Guaranteeing Gulf energy flows to allies has always been a core US interest, while today’s Great Power Competition means China’s access will be rendered conditional.
This is not the Iraq war. If after operations to secure the coasts and islands and to clear mines, the Iranian regime resists, the USA plan is that Iran’s oil sector and economy would be destroyed by aerial bombardment. Washington neither desires nor needs to occupy Iran proper nor to change the regime. The US strategic imperative here is to secure, long term energy flows from the Region and, accordingly, to end the regime’s capacities to project regional power.
After almost 30 years of analysis and my university seminars, there is very little I see new here, save a new USA urgency.
In my view, this urgency flows from USA concerns over Great Power Competition, especially with China. This is exacerbated by the possibility that Iran could close the Strait in solidarity with China (or perhaps Russia) during any Great Power conflict elsewhere. The threat of Iran’s developing capacities in this regard, especially its missiles and drones, but also its nuclear weapons ambitions and intentions to rebuild its regional proxy allies, all act to undermine the prerogatives of the USA and its Gulf regional allies to secure the region and its energy flows.
In any case, the idea that Washington and Trump “have no strategy” is demonstratively wrong, and self-disarming. (See, for example, my EIES study of Trump administration energy policy since ca. April 2025 v. Russian oil.) One might not fully understand the strategy, or might disagree with it, but there is clearly a multifaceted strategy here under the general slogan of “USA Energy Dominance” (e.g., see posts here and here). Besides Iran, it especially includes Russia, Venezuela, India, and of course China, as well as US domestic oil, gas, nuclear and renewables policies.
Author’s screen shot from NTD News. The statement was posted on Tuesday.
Note, a third Amphibious Assault Group, an aircraft carrier with an additional Marine Expeditionary Unit of 2000-2500 troops, has just arrived to join two other already in the Region. This further shows that Trump is increasing preparations to seize Hormuz, not backing down.
Both Christof Rühl (bio) and Jack Kemp (bio) had great, data-driven media this past week. I too addressed these issues (spoiler: I assess Trump is not bluffing on Iran talks, and oil supply remains adequate.) My conflict-trajectory take differs a bit from Chrisof, perhaps closer to Jack K here.. My Al Jazeera was just after Trump announced talks.
Mar 12, 2026. Is the Iran war about the US containing China? For my part, I explained how control of Hormuz would give the US two key levers:
The USA will control half of China’s oil imports, 5.4 million barrels per day (mbd), which flow through Hormuz.
The USA will insure that during any Pacific war China might start that Iran, acting in solidarity with China, could not block oil flows to US Asian allies such as Japan, S. Korea, Australia, Philippines, or flows to others whose supplies it would also want to guarantee, such as Viet Nam, Indonesia, Malaysia, Singapore, etc..
This is a longish, ca. 30 minute video. Host Nataly Lutsenko kindly told me she wanted to make a long interview.
(During time of crisis like this, I have so many TV and press interviews that I don’t have time to put most of them online. So, I will refrain from writing long posts to accompany videos to get more online, if I think they are useful interviews. – Tom O’D)
Last night on TRT World Global News (London), I emphasized that despite the modest spike in oil prices from about $70 to $78 per barrel as of yesterday, Trump has an historically unprecedented advantage for exercising “US Energy Dominance.”
Fig. 1. IEA projects global oil glut throughout 202
The campaigns against Venezuela and Iran, plus the turning of the Indian oil-consuming behemoth towards USA and Western interests vs Russian oil, are examples of the geopolitical leverage the USA’s now-dominant role in global oil affairs has afforded the Trump administration.
This oil-market advantage comes mainly from of two things:
