Let me be direct about something before diving in. There is no moral equivalence between geopolitical analysis and cheerleading for war. People are dying in Iran, on ships in the Gulf, and in US bases across the Middle East. That cost is real and should not be minimised. But as armchair students of strategy -- and if you have followed this blog you know that is exactly what we are -- we also cannot pretend the strategic picture does not exist. Wars have consequences beyond the body count. This is an attempt to read those consequences honestly.
So. Turn on any news channel right now and you will hear some variation of the following:
They were wrong about Iraq in 2003. Wrong about Afghanistan in 2021. And in my reading, wrong again today. Let me explain why.
There is also a specific media ritual that plays out in every major conflict that deserves to be called out. Photographs of dead children are deployed on cue, and they are genuine tragedies every single one of them. But the same outlets that run these images with solemn outrage are often completely silent when the same regime uses civilian infrastructure as military cover, or when it pushes young men to the front lines as cannon fodder, or when it has been funding proxy wars that have killed hundreds of thousands across Syria, Yemen, Lebanon and Iraq over the last two decades. Grief is being manufactured and selectively distributed. The children of Iran deserve better than being props in someone else's narrative war.
Alright. With that said. Here is the actual strategic picture.
America Built a Shock Absorber Nobody Noticed
The United States is producing over 13.6 million barrels of oil per day. Record high. More than any country on earth. It imports less than 2% of its petroleum consumption from Persian Gulf sources. When the Strait of Hormuz closes, America does not scramble. It watches.
But here is the part that is genuinely clever and which nobody is talking about. Tariffs -- the same tariffs that have been litigated, complained about and mocked for two years -- have quietly created a policy dial no previous American administration possessed. The mechanism goes like this: when global oil prices spike, Washington can selectively cut import tariffs on goods whose costs are being pushed up by energy costs. Producers widen their margins. Consumer prices stay anchored. The government absorbs the shock through the tariff lever rather than passing it directly to the pump. It is a pressure valve, and the US is the only major economy holding one right now.
Venezuela's heavy crude adds another layer. Gulf Coast refineries were built specifically to process that grade of oil. It is a Western Hemisphere supply chain that has nothing to do with the Persian Gulf and sits completely outside Iran's reach.
Compare this to the situation facing everyone else. Japan and South Korea source over 70% of their oil from the Middle East and are drawing down strategic reserves. Europe is watching its industrial energy costs bleed out. China is pivoting toward Russian crude, deepening a dependence on Moscow that serves nobody but the Kremlin. America sits in the sweet spot: producers profitable and investing, consumers hurting but not collapsing, trade position strengthening.
The Axis Just Cracked
For a decade the most serious long-term threat to American strategic primacy was not any single country. It was the quiet alignment between China, Russia and Iran. Three revisionist powers with complementary capabilities and a shared goal: dismantle the US-led international order.
The arrangement worked like this. Russia provides military hardware and energy leverage over Europe. Iran controls the Gulf chokepoint and projects power through proxies from Lebanon to Yemen. China provides the economic engine, the financial lifeline, the diplomatic cover and the technology transfer that keeps the whole structure functioning.
That structure just lost its geographic keystone.
Iran's proxy network across the Middle East -- and what has been dismantled
Iran was not merely one member of this axis. It was the geographic hub through which Russian and Chinese influence flowed into the Middle East. Hezbollah in Lebanon. Hamas in Gaza. Houthis in Yemen. Shia militias across Iraq. This entire network has been funded, armed and directed from Tehran for 40 years. Israel has been methodically dismantling it since October 2023. The US strike on February 28 accelerated that process dramatically.
Russia cannot meaningfully reinforce Iran -- it is already stretched beyond its limits in Ukraine. China is watching a key strategic partner crumble while managing its own economic slowdown. The carefully constructed architecture of anti-American alignment is under the most severe stress it has faced in a generation.
The axis has not been destroyed. But one of its three legs has been kicked out. Triangles do not stand on two legs.
NATO Just Remembered Who Needs Whom
For years European leaders have been building the case for strategic autonomy. Less dependence on American security guarantees. Energy diversification away from both Russia and the Gulf. The general vibe was that NATO was a legacy institution and that Europe would figure things out on its own.
That project is on ice.
Europe gets 12 to 14% of its LNG from Qatar, through the Strait of Hormuz. Its jet fuel supply chains run through the same chokepoint. Industrial energy costs are spiking at precisely the moment European economies are at their most fragile. And the only country with the military reach, intelligence infrastructure and energy independence to shape the outcome of this crisis is the United States.
Washington did not need to make this argument. The Strait made it instead. NATO allies are not returning to the table as equal partners. They are returning as countries that need American power more urgently than they did six months ago. That is leverage, and it will be cashed in on defence spending, trade terms, technology policy and above all on China.
China's Already Bad Year Just Got Substantially Worse
China entered 2026 already fighting on multiple fronts: property sector in slow-motion collapse, weak domestic consumption, deflationary pressure, demographic headwinds, and an export-led growth model running into tariff walls across every major Western market.
Now add an energy shock and a strategic retreat in Latin America.
China's Latin America footprint vs US pushback (2025-2026)
Roughly 40% of China's oil imports pass through the Strait of Hormuz. Its manufacturing sector runs on energy. When input costs spike, margins compress, exports weaken, and the growth numbers that Beijing depends on for political legitimacy start looking shaky. At the same time, the US has been systematically rolling back Chinese infrastructure across Latin America: Maduro removed from Venezuela, Panama exiting Belt and Road, Honduras pivoting back toward Taiwan, Chile blocking Chinese cable projects, Argentina under Milei firmly in the US orbit.
The window in which China could plausibly challenge American economic primacy is not infinite. It is roughly the next ten to fifteen years. Every year of slower growth and strategic retreat is compounding American advantage that cannot be recovered. China is losing time it cannot afford to lose.
The AI Race Has an Energy Winner -- and It Is Not Close
Artificial intelligence is not just a technology story. It is an energy story. The data centres required to train and run frontier AI models consume extraordinary amounts of electricity, and that demand is growing faster than most grids were designed to handle. The country that can supply that energy reliably, at stable prices, and without geopolitical interruption will have a structural advantage in AI that compounds over decades.
That country is the United States.
America's domestic energy production -- natural gas, expanding nuclear, oil -- gives AI infrastructure developers something neither China nor Europe can currently match: certainty. Hyperscalers and AI labs making ten-year capital commitments need to know the lights will stay on and the cost will not spike 40% because of a conflict in the Persian Gulf. In Europe, energy costs have already become existential for heavy industry. In China, the energy supply chain just became more dependent on Russia and more exposed to exactly the kind of Middle East disruption now unfolding.
The Hormuz crisis is effectively a tax on AI buildout in every energy-import-dependent economy. Higher electricity costs mean higher training costs mean slower deployment. The US, structurally insulated from the worst of the spike, keeps building. The AI gap that already existed is now widening further, not because America accelerated, but because everyone else just hit a speed bump America does not have.
Five Predictions
Right. Sticking my neck out. Here is where I think this goes:
Prediction 1
Redollarization -- the unipolar moment quietly returns.For the past decade the narrative has been relentless: the dollar is finished, BRICS will build an alternative, yuan settlement will replace SWIFT, the world is going multipolar. That narrative had genuine tailwinds -- high US debt, weaponisation of sanctions, growing non-Western trade flows, and above all the China-Russia-Iran axis providing an alternative pole of gravity. That axis is now cracking. Iran, the geographic hub, is being defanged. Russia is exhausted. China is on the back foot economically and strategically. Without a credible alternative pole, countries that were hedging toward a multipolar currency world have much weaker incentives to do so. Dollar-denominated oil will flow again. The US military just demonstrated it can project decisive force anywhere on earth. The dedollarization window does not just slow -- it closes. Call it what it is: redollarization. And with it, a unipolar world that was supposedly buried comes quietly back to life.
Prediction 2
US nominal GDP permanently pulls away from China. The gap becomes undeniable.China's nominal GDP was already tracking to plateau relative to the US given its structural slowdown. The energy shock, compounding property crisis and demographic cliff mean it never catches up. Within five to eight years the narrative of inevitable Chinese economic dominance gets quietly shelved. The US remains the world's largest economy not by luck but by structural advantage.
Prediction 3
2026 is the high-water mark of the China-Russia-Iran axis. It is already in decline.The axis that has been assembling since 2014 has just passed its peak moment of influence. Iran, the geographic hub, is being defanged. Russia is exhausted by Ukraine. China, facing economic pressure and watching its proxies eliminated, will quietly recalibrate toward economic pragmatism rather than military confrontation. Historians will look back at 2023 to 2025 as the apex of this alignment and 2026 as the turning point.
Prediction 4
A new Middle East takes shape with no Iranian veto over anything.Israel emerges from this conflict as the dominant military power in the Middle East with no meaningful near-peer challenger for the first time in its history. Saudi Arabia and the Gulf states, freed from the Iranian threat that has constrained their foreign policy for 40 years, accelerate normalisation with Israel and deepen alignment with the US. The Axis of Resistance -- Hezbollah, Hamas, Houthis, Iraqi militias -- is a shell of itself within three years.
Prediction 5
The Western Hemisphere becomes a US-dominated economic zone. Monroe Doctrine 2.0, with teeth.Panama Canal ports free of Chinese operators. Venezuela post-Maduro. Honduras back with Taiwan. Argentina under Milei firmly in the US orbit. Brazil watching carefully. The combination of US military credibility restored by the Iran operation and systematic rollback of Chinese infrastructure investment leaves Latin America more firmly in Washington's sphere than at any point since the Cold War ended.
Redollarization -- and the Return of the Unipolar World
The dedollarization narrative had genuine momentum. BRICS summits were declaring the end of dollar dominance. Russia and China were settling trade in yuan. Saudi Arabia was at least talking about pricing oil in non-dollar currencies. The argument was simple: America had weaponised its financial system through sanctions, so the rest of the world would build an off-ramp. And with China, Russia and Iran providing an alternative pole of gravity, that off-ramp had somewhere to go.
Here is the thing. Every one of those tailwinds depended on the axis holding together. China needed to keep growing and providing a credible economic alternative. Russia needed to stay functional enough to anchor the military side. Iran needed to remain the regional hub that gave the whole project geographic weight in the world's most energy-critical zone.
Strip out Iran and you have Russia -- exhausted, sanctioned, increasingly a junior partner to Beijing -- and China, which is now facing an energy shock, a growth crisis and a strategic rollback across Latin America simultaneously. The alternative pole of gravity just got much weaker. Countries that were hedging toward yuan settlement or BRICS currency arrangements now have to ask: hedge toward what, exactly?
Meanwhile the US military just demonstrated it can project decisive force into the most sensitive region on earth, absorb an oil shock better than any other major economy, and systematically roll back Chinese influence from the Panama Canal to the Andes. The dollar does not need a marketing campaign. It needs the world to look at the alternatives and find them wanting. That is exactly what is happening right now.
I am coining a term for what comes next: redollarization. Not a formal announcement. Not a treaty. Just the quiet, structural reassertion of dollar hegemony as the multipolar project loses its anchor. Watch for it in trade settlement data over the next two years. The trend will reverse before anyone on television notices it has started.
None of this is without cost for America. People at the pump are paying more. Inflation has a new upward pressure. Men and women in uniform are dying. These things are real.
But compare that to the alternative ledger. A China simultaneously hit on energy, growth and strategic alignment. A Russia that cannot help its most important regional partner. A NATO that has been reminded of its dependence on American power in the most visceral way possible. An Iran that was the geographic keystone of the anti-American axis in the Middle East. And an AI race where the only country with committed, domestically controlled, geopolitically insulated energy supply is pulling further ahead.
The television talking heads will keep predicting catastrophe. They have a show to fill and advertisers to keep happy. The rest of us can look at the map. Five predictions are on the table above. Check back in three years.
Standard disclaimer: armchair strategist speaking. This is opinion and analysis, not investment or policy advice. I have been wrong before and will be again. But these are the dots I am connecting as of March 2026.
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