The disruption to shipping through the Strait of Hormuz has severely impacted the supply of crude oil and liquefied natural gas from the Middle East, prompting global refineries and natural gas importers to urgently seek alternative sources. The United States, leveraging its shale revolution to accumulate production capacity, has to some extent offset the supply gap from the Middle East, acting as a global energy buffer. However, high exports are rapidly depleting domestic inventories, continuously narrowing the margin for error in the domestic energy system and exposing its weaknesses in risk resistance.

Decades of investment have built America’s energy supply capacity

A report released last week by the American Petroleum Institute (API) pointed out that record-high U.S. crude oil production, abundant natural gas capacity, and continued expansion of liquefied natural gas (LNG) exports are not the result of a short-term phenomenon, but rather the culmination of decades of continuous investment. Since the shale revolution began, the U.S. oil and gas industry has invested approximately $150 billion annually in upstream oil and gas extraction alone. Coupled with massive capital expenditures on infrastructure such as pipelines and export terminals, this has fundamentally reshaped the U.S.'s position in the global energy landscape. The conflict with Iran has disrupted traffic in the Strait of Hormuz, plunging the global energy market into turmoil. Over the past five months, record-breaking U.S. oil, gas, and refined product exports, coupled with market expectations of a de-escalation of the conflict, have somewhat mitigated the surge in oil prices. The API stated that the market remains tight, inventories are low, and uncertainty surrounding key shipping routes has not dissipated, but the U.S. energy system has buffered against potentially more severe supply shocks.

High exports are depleting domestic inventories, increasing risks in the US domestic market.

The cost of massive energy exports is the continued decline in US domestic inventories. Currently, US crude oil and refined product inventories are below the five-year average for the same period, with middle distillate inventories 12% lower than the five-year average. Even with domestic refining units operating at high capacity, large-scale exports continue to deplete reserves, significantly compressing the margin for error in the entire production, refining, and export chain. This means the vulnerability of the US energy market has increased significantly; unexpected events such as hurricanes or sudden refining shutdowns could easily trigger supply disruptions. Rising international oil prices have also impacted domestic consumption, with the average gasoline price across the US rising to $4 per gallon, up $1 from the end of February before the conflict and $0.90 higher than the same period last year. Ordinary consumers are directly bearing the increased costs brought about by the energy crisis.

Energy security requires long-term and sustained capital investment.

A full-blown easing of tensions in the Middle East remains a distant prospect. US oil and gas production capacity can only partially compensate for the supply losses from the Middle East, not completely replace them. The American Petroleum Institute (API) states that energy security relies on continuous investment across economic cycles, and the current supply shock serves as a stark warning. The current high production and export advantages are the result of long-term capital investment, which has also helped alleviate some of the pressure on consumers during the crisis. The API adds that a supportive policy environment is needed to continuously promote energy projects and infrastructure development, strengthening domestic energy development to further enhance the resilience of the US and the world in the face of supply shocks and prepare for future contingencies. In conclusion , the US, relying on the production capacity accumulated during the shale era, has played a buffering role in this Middle East supply crisis. However, declining inventories and rising domestic prices also indicate that this energy system has significant shortcomings, and long-term investment is fundamental to ensuring energy security.