ANALYSIS: When Washington Fights the Wrong War — The Iranian Gamble That Is Shaking Up the Global Oil Market

Oil as an Adjustment Variable—A Dangerous Illusion

The other aspect of this miscalculation concerns global oil markets. And here, the potential consequences extend far beyond the geopolitical context of the Middle East to directly affect portfolios, economies, and industries around the world. The Trump administration appeared to have factored into its projections that any potential oil disruptions would be manageable. Several factors fueled this optimism: record-high U.S. shale oil production, Saudi commitments to maintain sufficient supply, and global demand perceived as being in a state of slight structural decline due to the energy transition. On paper, the reasoning held up. In practice, it proved fragile.

What the administration misjudged was market psychology as much as actual supply flows. Oil markets do not react solely to barrels that are flowing or not flowing. They react to fear, uncertainty, and geopolitical signals. When strikes are carried out or threatened in a region that holds a decisive share of global reserves and energy transport infrastructure—the Strait of Hormuz, through which approximately 20% of the world’s oil passes, is within range of Iranian disruption—speculators go into a frenzy, risk premiums skyrocket, and prices soar. This mechanism is not new. It is well documented. And yet, it has not been sufficiently factored into strategic calculations.

The Strait of Hormuz: An ultimate weapon that Tehran does not need to use

There is a fascinating and formidable paradox in Iran’s strategy: the threat alone is enough. Iran does not need to close the Strait of Hormuz to create massive disruption in the oil markets. It need only hint that it might do so. Conduct military exercises in the region. To ostensibly intercept commercial vessels. To carry out calculated shows of force designed to amplify uncertainty without crossing the threshold that would trigger a full-scale U.S. military response. This threshold strategy, well known to defense analysts, has been used time and again by Tehran with remarkable effectiveness. Crude oil prices react, oil companies raise their insurance premiums, and the global economy absorbs the cost of a war that has not yet officially begun. This is what Washington, according to its own sources, failed to anticipate sufficiently.

Iran is often described as a limited regional power. But a power that controls 20% of the world’s oil supply is not all that limited. It possesses asymmetric power, and this asymmetry is precisely what the Trump administration underestimated.

Riyadh Caught in the Crossfire

The U.S. miscalculation does not concern only the bilateral relationship between Washington and Tehran. It has direct repercussions for all of the United States’ regional partners, starting with Saudi Arabia. The Kingdom of Saudi Arabia finds itself in an extraordinarily complex position. On the one hand, there are its historic ties with Washington, its alignment with the West, and its principled opposition to the Ayatollahs’ rule. On the other hand, there is a fragile normalization process with Iran—facilitated by China in 2023—and a national economy that depends on stable oil prices to finance its ambitious domestic transformation program: Crown Prince Mohammed bin Salman’s Vision 2030. An uncontrolled escalation in the region does not serve Saudi interests. And Riyadh has made this clear—discreetly but firmly—to its American counterparts.

The United Arab Emirates finds itself in a similar position. Abu Dhabi has significantly diversified its international partnerships in recent years, forging close economic ties with China and maintaining open channels of communication with Iran on certain issues, all while remaining a key U.S. ally. Washington’s bellicose rhetoric places these actors in an impossible position: publicly supporting actions whose consequences they privately fear. This disconnect between public rhetoric and private concerns is itself a piece of strategic intelligence that the Trump administration has clearly not sufficiently factored into its calculations.

Israel, the Ally That Complicates the Equation

It is impossible to analyze this situation without addressing Israel’s role. The Jewish state has its own strategic objectives regarding Iran—the elimination of Iran’s nuclear program has been at the top of its existential priorities for decades. The relationship between Netanyahu and Trump creates a unique dynamic: Can Washington compel Jerusalem to exercise restraint if Jerusalem believes a window of opportunity is opening? And conversely, could Israeli actions against Iranian or pro-Iranian targets drag Washington into an escalation it had not planned for? These questions are not theoretical. They arise in real time, in crisis rooms where decisions are made with incomplete information, tight deadlines, and intense political pressure. The misjudgment of Iran’s response fits precisely into this context of extreme complexity, which U.S. decision-makers seem to have oversimplified.

What deeply concerns me in this equation is the growing number of actors who all, in their own way, have an interest in some level of escalation—and the absence of a credible de-escalation mechanism that anyone would truly control.

A Conflict That Changed Everything

It is impossible to understand the current situation without grasping the extent to which the war in Gaza has transformed the regional and global geopolitical landscape. Before October 2023, there existed a certain architecture of managed tensions—precarious but functional balances among the various actors in the Middle East. The brutality of the conflict in Gaza, its catastrophic human cost for the Palestinians, its duration, and its intensity—all of this has reshaped the calculations of every key player. For Iran, the war in Gaza is both an opportunity and a risk. An opportunity to position itself as a champion of the Palestinian cause, to mobilize public opinion in Arab countries, and to legitimize its proxies—Hamas, Hezbollah, and the Houthis. A risk, because this overexposure could also lead to a direct escalation with Israel and the United States, which Tehran is, in reality, seeking to avoid.

The Trump administration inherited this explosive situation and appears to have believed it could manage it using the tools that had proven effective in other contexts. But the war in Gaza has created an emotional and political dynamic that transcends the usual rational calculations. Angry Arab populations, Arab governments under pressure from their public opinion, and an Iran that is using this anger as fuel—all against the backdrop of energy markets already strained by several years of successive shocks. Oil analysts who had warned of the risks of a sustained geopolitical premium on crude oil prices clearly did not receive the attention they deserved at the highest levels of the U.S. government.

The Houthis: A Perfect Illustration of Underestimation

If we want a concrete and striking example of the U.S. miscalculation, Yemen’s Houthis provide the most eloquent demonstration. This armed movement, backed by Iran, has been waging a campaign of maritime disruption in the Red Sea since late 2023, which has significantly impacted global trade, forced dozens of shipping companies to reroute around the Cape of Good Hope, and massively increased international transportation costs. U.S. and British strikes against Houthi positions in Yemen have not stopped these attacks. In some cases, they have actually intensified them. It is precisely this pattern—striking, seeing the adversary resist and adapt, striking again without a decisive result—that illustrates the fundamental nature of the miscalculation referred to by U.S. sources. The resilience, determination, and adaptability of the entire “axis of resistance”—as Iran has built and funded it over decades—were underestimated.

The Houthis are a textbook example. A group that many viewed with condescension—tribal rebels in a country in ruins—has managed to paralyze a global shipping route. If that doesn’t force a reconsideration of the initial assessments, then nothing will.

An Intelligence Agency Under Scrutiny

The admission of a strategic miscalculation inevitably raises questions about the U.S. intelligence community. The CIA, the DIA (Defense Intelligence Agency), and the NSC (National Security Council)—these institutions have thousands of analysts specializing in Iran, decades of expertise, and intelligence-gathering capabilities unmatched anywhere in the world. How could such a fundamental assessment have been missed? Several hypotheses come to mind. The first is political: in any highly ideologized administration, analysts who produce assessments that do not align with the wishes of policymakers tend to be marginalized, their reports ignored or reinterpreted. This is what experts call the phenomenon of “groupthink”—a collective mindset that filters out contradictory signals to reinforce the desired conclusion.

The second hypothesis is structural. The Trump administration, during its second term, carried out significant reorganizations within national security agencies, replacing experienced staff with individuals selected more for their political loyalty than for their technical expertise. If seasoned analysts specializing in Iran were sidelined or marginalized in favor of less experienced but more ideologically aligned personnel, the quality of the assessments produced would inevitably suffer. The consequences of this erosion of institutional expertise are now evident in the admissions from internal sources that should never have come to light.

The Influence of Ideological Advisers

We must also address the role of informal advisers and the ideological circles that surround any administration. In the Trumpian world, certain voices—those of recycled neoconservative hawks, the most hardline pro-Israel lobbies, and think tanks that have for years pushed for a direct confrontation with Iran—have exerted influence over the definition of strategy. These voices share a certain internal coherence—a worldview in which U.S. military power, when properly applied, can resolve the most complex geopolitical problems. This vision revealed its limitations in Iraq in 2003, in Libya in 2011, and in Afghanistan over the course of two decades. It appears to be revealing them once again in the case of Iran. History is instructive in that it always repeats itself in slightly different ways, but with the same underlying errors.

When decision-makers replace experts with loyalists, they buy themselves a comfortable worldview in the short term. The bill always comes due—and it comes with interest.

The Looming Oil Crisis

The underestimation of the impact on oil markets has consequences that extend far beyond the Middle East, Washington, or Tehran. It affects every oil-importing economy in the world, every consumer who fills up their vehicle, and every industry that depends on hydrocarbons to operate. Since tensions began to escalate, crude oil prices have fluctuated significantly, with spikes that reflect less the fundamentals of supply and demand than the geopolitical risk premium that markets are pricing in. This premium is real, it is costly, and it weighs disproportionately on the most vulnerable economies—energy-importing developing countries and low-income households in developed economies.

European economies, already weakened by several years of successive energy shocks since the start of the conflict in Ukraine, are particularly vulnerable. Europe had embarked on a long and painful process of diversifying its energy supplies. A new disruption linked to tensions in the Persian Gulf would undermine this process, return European economies to the dependencies they were seeking to overcome, and fuel inflationary pressures that central banks are already struggling to control. This is not an abstract prospect. It is a direct and predictable consequence of the miscalculation that U.S. sources now acknowledge.

China: A Key Observer and Potential Big Winner

In this situation, there is one player observing with a mix of concern and opportunism: China. Beijing is the leading buyer of Iranian oil—an economic relationship that U.S. sanctions have failed to sever, and which gives China leverage over Tehran that Washington lacks. A major escalation in the region would disrupt the oil supplies that China itself needs to fuel its economy. But a managed escalation—one that would weaken the United States geopolitically, exhaust its military and diplomatic resources, and push regional actors to seek new partners—could serve Beijing’s long-term interests. China is therefore playing a subtle game: it has no interest in a total regional catastrophe, but neither is it eager to see Washington emerge victorious from a standoff with Iran.

Every time Washington stumbles in the Middle East, Beijing scores points. Not by doing anything extraordinary. Just by being there—patient, pragmatic—and signing contracts while others wage war.

Leaks That Speak for Themselves

The very fact that this information is circulating via anonymous U.S. sources to a media outlet like the Middle East Monitor is, in itself, a major news story. In any government, leaks serve as a barometer of the internal health of the administration. When government officials speak to the press to point out a mistake made by their own administration, it is generally a sign of several things happening simultaneously. First, there are individuals within the government who are sufficiently concerned about the current course of events to take the personal risk of speaking out. Second, internal corrective channels—the mechanisms through which advisors can report errors to their superiors—are not functioning. Third, the situation is serious enough that these individuals believe the information must be made public.

Taken together, these three indicators paint a picture of an administration under internal strain, whose decision-making processes suffer from significant structural problems. This is not a political judgment—it is an interpretation of the signals sent by the government’s own behavior. The history of U.S. administrations is marked by moments when leaks preceded major strategic errors or revealed them after the fact. The question is whether lessons will be learned in time to correct course, or whether the full extent of the problem will only be discovered once the damage has become irreversible.

The Trumpian Decision-Making Model Faces Its Own Limits

Decision-making in the Trump era is characterized by extreme centralization around a few key figures, a prioritization of instinct over analysis, and a resistance to the long-term, nuanced perspectives that complex crises require. This model has its advantages in certain contexts—it allows for rapid decisions, clear-cut positions, and an unpredictability that can destabilize adversaries. But when facing an adversary like Iran—patient, multidimensional, and an expert in asymmetric warfare—these qualities become vulnerabilities. Speed without depth leads to miscalculations. Instinct without expertise creates blind spots. And unpredictability, when unchecked, can lead to escalations that no one truly wanted.

Governing by instinct may work for trade negotiations or real estate deals. But when dealing with a geopolitical issue as complex as Iran—with its fifty shades of red and twenty layers of history—instinct alone is not enough. Depth is required. And depth must be acquired; it cannot be improvised.

What Negotiation Could Have Avoided

To fully understand the extent of the cost of this miscalculation, one must consider the path not taken. On several occasions since 2021, diplomatic windows of opportunity have opened in U.S.-Iranian relations. Negotiations on the JCPOA had progressed under the Biden administration, though they did not result in a final agreement, largely due to disagreements over the lifting of sanctions and guarantees against future reimposition. Iran had demanded guarantees that a future U.S. administration would not revoke the agreement again—a perfectly rational demand given the precedent set in 2018, but one that a U.S. administration could not formally offer without encroaching on the prerogatives of Congress and future presidencies.

These imperfect, complex, and frustrating negotiations nevertheless had the merit of existing. They created channels of communication. They allowed, in the absence of an agreement, for a certain level of controlled tension. Trump’s return and the choice of maximum pressure over negotiation closed those windows. It signaled to Tehran that the diplomatic route was not available, and therefore that the only way to respond to U.S. pressure was to harden its stance, develop its capabilities, and use its proxies more aggressively. This signal, received and understood by the Iranian regime, is a significant part of the explanation for the response that the administration had not anticipated.

Diplomacy as a Tool of Strength, Not Weakness

There is a tendency in American political culture—particularly among its most nationalist and hawkish factions—to view diplomacy as a sign of weakness, as if negotiating meant backing down, yielding, or lacking firmness. This view is not only false; it is strategically counterproductive. The great historical powers that have maintained their influence over the long term—19th-century Great Britain, the United States itself during the heyday of its diplomacy—did so by combining military strength with sophisticated diplomacy, capable of turning adversaries into partners, managing tensions before they escalated into crises, and building systems of international order that served their interests. Reducing foreign policy to a purely hard-and-fast balance of power means giving up half of a power’s toolkit.

In the real world, diplomacy is often the most effective way to secure a power’s interests. Not because it is gentle. Because it is precise. A bomb destroys. A well-conducted negotiation can compel, restructure, and endure.

The Graveyard of Good Analyses

It would be unfair to portray this situation as if no one had foreseen it. The reality is more troubling: experts, analysts, and researchers specializing in Iran and the Middle East had publicly and explicitly warned of the risks associated with the maximum pressure strategy. Institutions such as the Council on Foreign Relations, the International Crisis Group, and the Quincy Institute for Responsible Statecraft, as well as scholars specializing in Iranian politics at top U.S. universities—all had produced detailed analyses explaining why maximum pressure without a parallel diplomatic offer risked producing exactly the results we are seeing today. This research was available. It was accessible. It was not sufficiently incorporated into the decision-making process.

This phenomenon—expertise that is available but ignored—is one of the most persistent and damaging dysfunctions of major modern democracies. The gap between knowledge producers—academics, analysts, and field experts—and policymakers is often vast. Decision-makers are pressed for time, overburdened, and surrounded by advisors who have their own agendas. Experts, for their part, often speak in a language that is too technical, too nuanced, and ill-suited to the constraints of political communication. The result is a colossal waste of collective intelligence, the consequences of which are measured in terms of human lives, regional destabilization, and economic costs.

The lesson no one ever learns

What is particularly striking in the case of Iran is that this type of mistake—overestimating the effectiveness of military and economic pressure while underestimating the adversary’s resilience and ability to adapt—has already been made repeatedly by Washington. Saddam Hussein’s Iraq was supposed to collapse quickly under pressure. It took years of war, thousands of American deaths, hundreds of thousands of Iraqi deaths, and the emergence of lasting regional chaos. Afghanistan was supposed to stabilize with the right level of military presence. Twenty years and several trillion dollars later, the Taliban had returned to power. Iran was supposed to yield to the “maximum pressure” of Trump’s first term. Instead, it enriched more uranium. These recurring patterns of error—these cycles of overestimation and underestimation—raise profound questions about the mechanisms of institutional learning within the U.S. government.

There is something deeply saddening about the fact that the same mistakes are repeated through the same mechanisms, in the same regions, with different actors but an identical logic. We call this history. We should call it an avoidable tragedy.

The Specter of Open Conflict

The question now haunting foreign ministries around the world is simple in its formulation, yet terrifying in its implications: where is this escalation headed? Several scenarios are emerging, ranging from the less dramatic to the most catastrophic. In the first scenario, the Trump administration learns from its miscalculation, quietly adjusts its strategy without publicly acknowledging it, and seeks indirect channels for de-escalation—through the Omanis, the Qataris, or other intermediaries who have historically played this role. Iran, for its part, maintains its pressure without crossing the threshold that would trigger a direct U.S. military response. An unstable but manageable balance is maintained, with high economic costs but falling short of total catastrophe.

In the second scenario, the administration—politically unable to publicly admit a mistake—chooses escalation to mask its initial failure. A new military action—a strike on Iranian facilities or a naval confrontation in the Persian Gulf—would trigger an Iranian response, which in turn would trigger a U.S. response, in a spiral over which each actor gradually loses control. This scenario is not the most likely, but it is far from impossible, especially in an administration where internal political pressure is strong and the culture of accountability is weak. The third and bleakest scenario is a confrontation directly involving Israel—an Israeli strike on Iranian nuclear facilities that would prompt an Iranian response against Israel and U.S. targets in the region, forcing Washington into a war it did not necessarily choose but in which it would find itself de facto involved.

The safeguards that have never seemed so fragile

What kept the international system relatively stable during the decades of the Cold War, and then in the immediate post-Cold War era, was the existence of de-escalation mechanisms—hotlines, communication protocols, and implicit norms regarding what was acceptable and what would cross unacceptable thresholds. These mechanisms are now seriously weakened. Direct communication between Washington and Tehran is virtually nonexistent. Indirect channels are being used but remain fragile. International norms on the use of force are being challenged from many sides. Against this backdrop of eroding safeguards, the risk of unintended escalation—that infamous “accident of history” that triggers a war no one wanted—is significantly higher than it should be.

Unintended wars are often the most devastating. Because once they start, no one has a plan to end them. We find ourselves in the middle of them, and then we look for a way out. That’s how it almost always begins.

An International System Under Extreme Strain

The U.S. miscalculation regarding Iran and the oil markets cannot be viewed in isolation. It is part of a context of profound transformation in the world order—a tipping point between the U.S.-led unipolarity that characterized the world after 1991 and something new, still poorly defined, but clearly multipolar. In this new context, the United States’ traditional instruments of power—military superiority, economic dominance, and the ability to impose sanctions—retain their strength but are becoming less effective. China and Russia offer alternatives to states seeking to escape U.S. pressure. Parallel financial institutions, alternative transaction currencies, and trade networks that bypass the dollar—all of this creates room for maneuver for actors like Iran that did not exist in the same way twenty years ago.

In this more complex, more fragmented, and more multipolar world, strategies of maximum pressure are having an increasingly unpredictable and risky effect. The targeted adversary can find alternative allies, substitute trade outlets, and diplomatic support that mitigate the impact of the pressure. And in the meantime, the costs to the actor imposing the pressure—in terms of diplomatic capital, economic resources, and market stability—can be significant. This is precisely the picture painted by the U.S. sources who agreed to speak: a strategy whose costs have been underestimated and whose benefits have been overestimated, in a world that is no longer the one of U.S. unipolar power of the 1990s.

U.S. Credibility: A Non-Renewable Resource

Finally, there is the question of credibility. U.S. power, beyond its military and economic capabilities, rests on the credibility of its commitments, threats, and assessments. When internal sources publicly point to a major strategic miscalculation, it is this credibility that takes a hit. Allies begin to doubt. Adversaries note the vulnerability. Middle powers, who are constantly calculating which side is best to align with, reconsider their positions. Credibility is not an abstract concept—it is a concrete strategic asset, built up over decades and squandered much more quickly. Every admitted miscalculation, every discrepancy between public statements and the private realities revealed by leaks, erodes this precious and hard-to-rebuild asset a little further.

Credibility is perhaps a great power’s most valuable resource. And it is also the most fragile. A reputation is built over decades. It can collapse in the wake of a few bad decisions, a few misjudgments, or a few admissions that leak out where they shouldn’t.

A mistake that calls for an appropriate response

The admission—discreet, indirect, filtered through anonymous sources—that the Trump administration misjudged Iran’s response and the war’s impact on oil markets is more than just an episode of geopolitical mismanagement. It is a symptom of a profound disconnect between the worldview of certain American decision-makers and the complex, resilient, and often surprising reality of the world as it is. This disconnect comes at a cost. It is paid for in the form of heightened regional tensions, economic disruptions, human lives lost in already devastated regions, and the erosion of American influence that the United States has spent decades building. Acknowledging the mistake is a first step—but only a first step, and only if it leads to a genuine correction of strategy.

What is at stake in the Iran issue is not merely the bilateral relationship between Washington and Tehran. It is the United States’ ability to navigate a multipolar world with the sophistication and depth that such a world demands. It is the ability of the world’s leading power to learn from its mistakes, to incorporate available expertise, and to correct its assessments when the facts contradict them. Ultimately, it is a question about the very nature of American leadership in the 21st century. The response the Trump administration gives in the weeks and months ahead will say a great deal about what this power is still capable of being.

The world holds its breath

While anonymous sources speak out and analysts dissect the situation, the world keeps turning—and with it, the tensions that threaten to send it spiraling out of control. Palestinian families under bombardment in Gaza. Merchant mariners rerouting their ships around Africa to avoid the Red Sea. Households in Europe keeping a close eye on their energy bills. Governments in the Persian Gulf playing a multi-layered game of chess simultaneously. And somewhere in Tehran, strategists who have observed the U.S. miscalculation and drawn their own conclusions about what Washington can and cannot do. History does not pause while the powerful acknowledge their mistakes. It marches on, relentlessly, indifferent to belated admissions. And that is precisely why strategic miscalculations matter so much—because their consequences do not stop.

What remains with me from this analysis is an uncomfortable conviction: major geopolitical errors are never really surprises to those who were watching closely. They are surprises to those who had decided not to look. And that is where the real responsibility lies.

Signed, Jacques Pj Provost