Energy, Power, and Geopolitics: How U.S. Policy and Conflict Shape the Global Oil Market

As global tensions rise and energy costs remain volatile, recent developments in both U.S. domestic policy and foreign military actions are bringing renewed attention to the vital link between oil, national security, and international stability.

President Donald Trump has urged the United States to rapidly increase its domestic oil production. Against the backdrop of rising energy prices and geopolitical uncertainty, he criticized the Biden administration’s regulatory policies, claiming they have weakened U.S. energy independence. Trump emphasized that the country’s reliance on foreign oil has made it vulnerable to global shocks and argued that boosting domestic production would not only help stabilize prices at home but also reassert the United States’ strategic power abroad.

He framed energy dominance as a national imperative—essential for curbing inflation, deterring adversaries, and reinforcing America’s leadership in global affairs. By expanding oil output and rolling back environmental restrictions, Trump believes the U.S. can protect itself from future crises and economic instability.

At the same time, tensions in the Middle East are adding new strain to an already fragile global oil market. Recent U.S. military strikes on Iranian-backed forces have raised concerns about a broader conflict that could endanger vital oil shipping routes, especially the Strait of Hormuz. This narrow passage way handles nearly 20% of the world’s oil supply, and any disruption there could cause oil prices to surge rapidly.

Analysts caution that heightened conflict with Iran—a major oil producer—would not only push energy costs higher but also complicate diplomatic efforts aimed at de-escalation. With each escalation, the risk of long-term instability in the region grows, threatening both global markets and U.S. strategic interests.

Although one issue is rooted in domestic policy and the other in foreign conflict, both underscore a common theme: energy remains central to America’s national security and global standing. Balancing environmental priorities with economic stability and geopolitical strategy presents an ongoing challenge. As these events show, decisions made at home and abroad are deeply intertwined, with oil sitting at the heart of it all.

These developments have significant implications for commercial real estate and the wider economy. Rising oil prices tend to drive up operational and transportation costs, which can lead to increased inflation. If the labor market remains strong and rising energy prices results in stubbornly persistent inflation, the Federal Reserve will further be influenced to hold off on interest rate cuts.  For commercial real estate, this may translate to higher utility expenses, construction costs, and tenant operating budgets—particularly for logistics, retail, and industrial properties that are sensitive to fuel and energy fluctuations. From the investment perspective, higher for longer interest rates will put a damper returns. Investor confidence can also waver amid geopolitical instability and market volatility, potentially slowing down new developments, tightening lending conditions, and tempering property values. Moreover, prolonged uncertainty in energy policy and global supply chains can delay business expansion plans, affecting demand for office and commercial space. In essence, energy and geopolitical shocks ripple through the economy—shaping investment behavior, tenant demand, and overall real estate market performance.

The good news is the truce between Israel and Iran seems to be holding. So for now, it is business as usual, onward and upward!