Does the Persian Gulf Still Matter?

The gulf’s value to U.S. strategy certainly is not worth additional defense obligations to the region.

Since the economic shock of the 1973 oil embargo, the United States has considered the free flow of oil from the Persian Gulf crucial to its economic and national security. Fast forward over fifty years, and the U.S. is contemplating a security pact with Saudi Arabia, driven partly by the perceived importance of Persian Gulf oil.

Washington asserts that the Persian Gulf is central to U.S. security for several reasons. Firstly, the safe transit of oil from the Gulf is seen as vital. Secondly, dominance in the Persian Gulf means control over three critical maritime chokepoints: the Strait of Hormuz, the Suez Canal, and the Bab el-Mandeb Strait. Thirdly, Saudi investment in U.S. government obligations keeps the global oil market priced in U.S. dollars, reinforcing the dollar’s status as the global reserve currency and underpinning U.S. financial supremacy.

Moreover, there’s the belief that if the U.S. does not assert its dominance in the region, a rival power—formerly the Soviet Union and now China—will step in. But is the Persian Gulf still as vital to U.S. security as it was decades ago? Is it worth additional security commitments?

Reassessing the Need for Persian Gulf Oil

The fear of another 1973-style oil embargo has long driven U.S. policy. Despite being a top oil producer, the U.S. has historically been one of the largest oil consumers, necessitating imports. This dynamic once gave Saudi Arabia and OPEC significant leverage over the U.S. economy. However, the U.S. has since reduced its dependence on foreign oil. The modern oil market is also far more flexible than in the 1970s, making it easier to adapt to changes in supply.

Maritime Chokepoints and Economic Impact

Of the three critical maritime chokepoints, only the Strait of Hormuz is an absolute necessity for global oil transport. The Suez Canal and the Bab el-Mandeb Strait, on either side of the Red Sea, are not irreplaceable. Trade can be rerouted around Africa’s southern cape—longer and more disruptive, but not catastrophic. The 2021 Ever Given incident in the Suez Canal demonstrated this; while inconvenient, it was far from economic doomsday. Similarly, Houthi activity around the Bab el-Mandeb Strait has caused disruptions but not disasters.

The Strait of Hormuz, through which 20-30% of the world’s daily oil consumption passes, poses a more significant risk. However, Iran’s capability to blockade the Strait is questionable, and the U.S. has managed Iranian threats before without needing increased regional commitments.

The Petrodollar and Financial Supremacy

U.S. commitment to the Gulf is often justified by the need to maintain dollar supremacy through petrodollar recycling. Despite ongoing speculation, there has been no drastic reduction in U.S. financial power. The lack of a convincing alternative to the dollar—given the Euro’s limitations and the Yuan’s instability—has maintained this status quo. Moreover, shifts toward green energy over the next few decades mean the U.S. should reconsider its commitment to the petrodollar system rather than doubling down with security guarantees.

The Myth of Necessary Dominance

Finally, the notion that the U.S. must continuously project strength in the region to prevent rival powers from gaining influence has allowed Saudi Arabia to leverage its position without making concessions. Despite Saudi Arabia’s controversial actions, including oil production cuts, the war in Yemen, and human rights violations, the U.S. remains steadfast in its support.

Overstating the Persian Gulf’s importance leads to American overcommitment and drains resources. Washington’s concern about Chinese influence in the region overlooks the fact that China benefits from U.S. security efforts without bearing the costs. China is more dependent on Persian Gulf oil than the U.S., yet enjoys secure access provided by the U.S. military. It’s time for a strategic rethink