ENERGY AND GEOPOLITICS: A CONVERSATION WITH HENNING GLOYSTEIN

29.10.2026

NOVA-MBA Administrator

The conversation examined how conflict, energy supply and shifting alliances are reshaping the global economy. Henning’s central assessment was that short-term commercial gains from disruption can coexist with lasting strategic costs. He saw elevated financial risks, growing Chinese industrial strength and a need for Europe to act more independently.

The questions below are paraphrased for readability. Forecasts and political assessments are presented as expressed during the discussion.

Key takeaways

•  US energy policy is intended to expand production and influence. Henning argued that the benefits accruing to some energy companies must be weighed against higher consumer prices, military commitments and damage to relations with allies.

•  The Iran conflict has become a wider regional crisis. In Henning’s assessment, expectations of a short campaign gave way to a cycle of retaliation that made disengagement increasingly difficult.

•  Henning stated that Eurasia Group assigns a 70% probability to a recessionary financial crisis in the European Union and/or the United States before 2030. He stressed that the precise timing and trigger remain unpredictable.

•  Henning expects the rupture in the international order to endure beyond the current US administration. He forecast that China will be the dominant global power in industrial capacity and growth technologies by 2035.

•  Trade is being reorganised through technology, regulation and new partnerships. Henning expects the strongest growth over the next five to ten years to come from relationships among countries outside the US–China bilateral axis.

•  Europe retains meaningful economic and strategic influence despite high energy costs and security pressures. Henning was also positive on South America’s resources, energy supply and agricultural export capacity.

About the speaker

Henning Gloystein is Managing Director for Energy, Climate & Resources at Eurasia Group, which he joined in 2019. Based in London, he previously served as Reuters’ Asia energy editor and deputy editor in charge of Asian commodities. Earlier, he led Reuters’ European power, gas and coal coverage and Platts’ European power pricing team in London. He spent seven years in Singapore before returning to London in 2021.

1 US energy policy and the costs of conflict

What has the United States gained from the conflicts in Ukraine and Iran, particularly in energy markets, and how do those gains compare with the costs?

Asked by Stefano Grasso

Henning described the US energy-dominance agenda as an effort to expand domestic oil and gas production and strengthen American influence across global supply chains. He linked this approach to Energy Secretary Chris Wright’s views on the strategic importance of hydrocarbons, including those set out in Liberty Energy’s 2024 report Bettering Human Lives, published while Wright was its chief executive.

In Henning’s interpretation, the intended bargain with US energy companies is greater production and market access in exchange for accepting lower prices. Expanding the role of American oil and gas in other countries’ economies could also sustain demand for hydrocarbons beyond their stated energy-transition timelines. He cited Venezuela and Guyana as important examples of the commercial and strategic interests involved.

The results of conflict, however, can diverge from those intentions. Henning argued that supply disruptions have created substantial opportunities for US energy exporters while leaving consumers exposed to high fuel prices. US crude production of about 14 million barrels per day does not eliminate that exposure. Refineries can process domestic light crude, but many complex plants are configured for blends that also include heavier imported grades; product yields and global supply shortages still matter for diesel availability.

Follow-up question  Were high prices the intended outcome, or an unintended consequence subsequently exploited?

Henning regarded the outcome as largely unintended. He argued that the Iran campaign had been expected to be brief and ultimately to make more Iranian oil available at lower prices. Instead, prolonged disruption had raised costs and increased the political pressure to bring fuel prices down. The United States had temporarily authorised imports of Russian-origin diesel, a measure he viewed as an attempt to ease domestic supply pressures.

His central distinction was between commercial gains for individual companies and the broader national balance of costs and benefits. He judged the longer-term damage to US credibility, relationships with allies and strategic flexibility to be substantial.

2 Escalation in Iran and the wider region

Why did the Iran conflict escalate beyond expectations, and why did the United States remain engaged after the initial strikes?

Asked by Stefano Grasso

Henning argued that the early expectation of a short campaign underestimated both Iran’s capacity to retaliate and the difficulty of controlling escalation. Strikes spread across the Gulf and affected energy infrastructure, shipping and regional security. Each response created pressure for a further response, making it harder for either side to accept the last attack without retaliating.

He also emphasised that the conflict was being shaped by several actors with their own objectives. Israeli actions, Iranian retaliation and Houthi involvement extended the crisis beyond the original US–Iran confrontation. This helps explain why a military operation initially conceived in narrow terms developed into a much wider regional conflict.

Follow-up question  Was there an opportunity to declare the initial objectives achieved and disengage?

Henning’s assessment was that the intensity and geographic spread of retaliation had rapidly narrowed that opportunity. The security of partners and infrastructure across the Gulf became part of the escalation cycle, increasing the cost of both continued involvement and withdrawal.

Regional security commitments have also broadened. The discussion covered British air-defence deployments, French support for Saudi energy infrastructure, and Türkiye’s defence alliance with Saudi Arabia and Pakistan. These are distinct national and regional arrangements. The EU’s EUNAVFOR ASPIDES mission contributes to maritime security. Henning suggested that the crisis could ultimately mark a lasting reduction in US influence in the Middle East, drawing an analogy with the consequences of the Suez crisis for Britain and France.

3 US support for Israel and domestic politics

Why does President Trump continue to support Prime Minister Netanyahu despite the costs of the conflict and divisions within the US electorate?

Asked by Stefano Grasso

Henning pointed to ideological affinities between the current US and Israeli leaderships, particularly their shared hostility towards Iran’s leadership and their nationalist political outlook. He also described the importance of regional diplomatic and commercial relationships linking the United States, Israel and Gulf states.

Stefano questioned how this alignment fits with changing attitudes among younger Republican voters and with Washington’s approach to Russia. Henning’s response focused on the political importance of maintaining a disciplined core of supporters. In his assessment, a cohesive electoral base can sustain a policy even when it lacks broad consensus across the electorate.

Henning characterised the administration’s approach as transactional, with individual relationships and specific agreements carrying considerable weight. This can produce policy choices that appear inconsistent when viewed through the traditional framework of fixed alliances and rivalries.

4 A changing international order

How can the United States accommodate Russia while confronting Iran, given the relationships between those countries and their regional partners?

Asked by an audience member

Henning argued that the familiar assumptions governing international relations have become less reliable. He referred to Canadian Prime Minister Mark Carney’s description of a rupture in the world order and suggested that established expectations about US support for Europe and Gulf partners, or its approach to Russia and China, should no longer be taken for granted.

He considered a major US agreement with China and Russia that sidelines European interests plausible within the following eighteen months. His wider point was that governments are already responding to diminished confidence in old arrangements by building additional trade and security relationships.

Europe’s trade initiatives provide examples of this response. The EU–Mercosur interim trade agreement began applying provisionally in May 2026, and negotiations with India and Australia concluded earlier in the year. Canada is deepening its strategic and defence cooperation with Europe. Henning also highlighted the search by Gulf countries for a broader range of security partners.

Follow-up question  Could a future US administration restore the previous international order?

Henning expected a future administration to be more accommodating towards Europe and potentially more cautious about China. Nevertheless, he did not expect a return to the previous order. In his view, too much trust has been lost and too many alternative arrangements have been established. Those structural changes are likely to outlast the political circumstances that prompted them.

5 Financial stability and the risk of a crisis

Do high energy costs, inflation, sovereign borrowing and AI-related debt point towards a major financial crisis?

Asked by Alessandro Santo

Alessandro raised the cumulative pressure created by energy prices, borrowing costs and rising debt. Henning agreed with the concern and stated that Eurasia Group assigns a 70% probability to a recessionary financial crisis in the European Union and/or the United States before 2030.

He emphasised that identifying vulnerabilities is easier than forecasting the moment at which they become a crisis. The trigger can be an unexpected event that exposes weaknesses already present in balance sheets, markets or public finances.

The scenarios discussed included fiscal and financing pressures in France and the United Kingdom, a reversal in AI-related financing or disruption in US government funding, and defaults among Chinese local governments or entities associated with them. Henning’s broader concern was the accumulation of public and private debt across several major economies at the same time.

6 Trade fragmentation and South America

Are investment flows dividing into a US-oriented South America and a China-oriented Southeast Asia, and will those regions become competing spheres of influence?

Asked by an audience member

Henning questioned the usefulness of a simple geographic division. China has a substantial presence in South America, Europe is expanding its relationship with Mercosur, and Japan remains an important investor in Southeast Asia. Companies and governments therefore face a more complex set of relationships than two neatly separated economic blocs.

He saw technology, regulation and environmental standards as increasingly important dividing lines. Disagreement over proposed international shipping-emissions rules was one example of how competing standards can affect trade and investment decisions.

Over the next five to ten years, Henning expected the strongest trade growth to come from relationships among other major and emerging economies: trade between developing countries, Europe’s links with the Global South, Japan’s ties to Southeast Asia, and India’s expanding international relationships. Europe’s high exposure to international trade helps explain its active pursuit of new agreements.

The outlook for South America

The discussion then turned to Henning’s positive view of South America. He highlighted the combination of critical minerals, domestic clean energy, oil and gas resources, and agricultural exports. Brazil’s position as one of the world’s leading agricultural exporters reinforces the region’s role in global food supply.

Henning’s optimism rested primarily on these structural advantages rather than on a particular political leadership. Participants also distinguished short-term market reactions to politics from longer-term economic strengths. He considered the region relatively less exposed to the main geopolitical conflicts discussed during the call.

7 Russia China and the balance of power

Could closer US ties with Russia weaken Europe’s competitive position while creating a counterweight to China?

Asked by an audience member

The question proposed a traditional balance-of-power interpretation of US policy. Henning acknowledged that some political circles view closer relations with Russia and greater fragmentation within Europe as potentially advantageous to the United States. He rejected the underlying strategic logic.

In his assessment, a Europe closely aligned with the United States has historically provided substantial economic and security benefits to America. Dealing with a fragmented Europe might make individual negotiations easier, but would weaken a valuable partner. He also doubted that Russia could become a sufficiently strong counterweight to China, or that Washington could separate the two countries given the depth of their relationship.

Henning forecast that China would emerge by 2035 as the dominant global power in industrial capacity and growth technologies. He emphasised the scale of Chinese manufacturing and its ability to expand or replace industrial and military output. His argument was that this capacity would be difficult for US diplomatic manoeuvring to offset.

He therefore expected the attempt to rearrange these relationships to carry a significant cost in lost trust without delivering the intended strategic advantage.

8 Europe’s strategic position

With high energy costs and dependence on imported LNG, is Europe losing strategic relevance, or does it still have meaningful options?

Asked by Stefano Grasso

Stefano framed the closing question around European gas prices of approximately €100 per megawatt-hour, reliance on US LNG and the wider pressure on Europe’s industrial competitiveness and security.

Henning acknowledged those challenges but remained cautiously optimistic. He argued that the attention other powers devote to Europe, and their interest in access to its markets and partnerships, demonstrate its continuing importance. Trade relationships with India and Mercosur, Gulf investment, and China’s interest in avoiding a comprehensive trade confrontation with the EU were examples cited in the discussion.

He identified the rule of law, infrastructure, intellectual-property protections and quality of life as enduring strengths. He also pointed to encouraging economic signals in Germany, Britain and Spain, while recognising the pressure on European public finances.

His closing assessment was that Europe has more economic substance and capacity to act than its own debate often acknowledges. Expanding trade partnerships and greater responsibility for defence give it practical ways to respond to a less predictable international environment.