The Iran War is accelerating the Southern Caribbean’s rise as a lower-risk energy hub with growing geopolitical and economic importance.

The Iran War is a reminder that oil still matters. The effect of the blockage of the Strait of Hormuz and damage to the Persian Gulf’s energy/petrochemical/fertilizer matrix will linger for years on the global economy. Moreover, any peace settlement is likely to be fragile. 

One region benefiting from the Iran War is the Southern Caribbean Energy Matrix, comprising Guyana, Suriname, and Trinidad and Tobago. In the post-Iran War era, the Southern Caribbean Energy Matrix will become more important in global geo-economics and will command greater attention from policymakers in China, the United States, India, and Europe. It also raises questions over Venezuela’s relationship with its Caribbean neighbors. 

What is happening in the Persian Gulf can have a transformative effect in the Caribbean, especially if those countries are willing to take up the challenge of redesigning the regional economy. 

Southern Caribbean Oil and LNG Growth 

The Southern Caribbean is emerging as a major oil-producing region. Guyana is one of the world’s newest petro-states. Oil was discovered in 2015 by a consortium of ExxonMobil, Hess (now Chevron), and China National Offshore Oil Corporation (CNOOC), with pumping starting in 2019. Next door in Suriname, TotalEnergies and Apache Corporation discovered significant offshore oil reserves in 2020 and are now investing $10.5 billion to eventually begin pumping it in 2030. 

Although Trinidad and Tobago’s oil industry is in decline, the two-island state is the third-largest liquefied natural gas (LNG) exporter in the Americas, behind the US and Canada, and just ahead of Bolivia. The development of the Dragon field, a joint venture between Trinidad and Tobago, Shell, and Venezuela’s PDVSA, will restore the twin islands’ LNG business and petrochemical facilities. Trinidad also has a shuttered oil refinery that could be tapped to support the development of Guyana’s and Suriname’s energy sectors. 

Guyana, a country of a little under 1 million people, has undergone a significant transformation from one of the poorest countries in the Western Hemisphere to a new petrostate. The Caribbean country has undergone a rapid transition from being what the World Bank calls a low-income economy to an upper-middle-income economy. This transformation was driven by ExxonMobil’s oil discoveries, the shift to oil production and export, and the tapping of petrodollars for a country remake. Today, Guyana is closing in on producing 1 million barrels per day (BPD), which puts it in the same production zip code as Venezuela. Guyana is expected to produce 1.7 million BDC by 2030, putting it close to Mexico’s production. Indeed, Guyana’s importance as an oil producer may surpass Mexico’s due to the latter country’s declining output, the massive debt of its state-owned oil company, Pemex, and underinvestment. Moreover, part of Mexico’s production goes to meet domestic demand; Guyana’s is overwhelmingly for export. 

Trump’s Foreign Policy Toward the Caribbean 

The fast-changing nature of global geopolitics is elevating the Southern Caribbean on the global energy-producing map. Several developments are behind this, including the election of Donald Trump as President in the United States and the change in energy policies contingent on that, the related capture of Venezuela’s corrupt and economically maladroit President Nicolás Maduro in early 2026, and the Iran War. 

President Trump’s return to the White House came with a change in foreign policy from the Biden administration. The Trump administration’s National Security Strategy (NSS) broadly outlines the “America First” approach to the rest of the world, equating economic security with national security. The message is clear—the US approach to the world is being overhauled, shifting from being the global gendarme to a more nuanced Fortress America policy framework, driven by a transactional strategy to inter-state relations as opposed to ideological narratives (such as democracy and alliances with fellow democracies) which dominated the Cold War. There is a strong emphasis on the Western hemisphere, particularly with the return of the Monroe Doctrine, which is pointed directly at China and, to a lesser extent, at Russia and Iran. It also stresses the need for stable governments in the Caribbean, necessary to help mitigate migration and transnational crime. While the Biden administration was strongly supportive of bolstering environmental security and dealing with climate change, the Trump administration is strongly oriented toward being the world’s dominant oil and gas power.

US policy has unfolded in two steps: first, the ouster of Venezuela’s President Maduro, followed by the Iran war. At the same time, the imposed US hegemony over Venezuela made that country’s oil a weapon against the long-term US geopolitical problem, Cuba. US pressure on Venezuela to turn off the oil tap on Cuba has pushed the Caribbean island’s Communist regime into dire economic straits and negotiations with the United States.

The Iran War and Energy Supply Chain Risks 

It is the Iran war, however, that casts the longest shadow on the Southern Caribbean Energy matrix. The Persian Gulf, which includes some of the world’s largest oil and natural gas exporters, has also developed geo-economically important petrochemical/fertilizer and aluminum facilities. The closure of the Strait of Hormuz has already forced prices for all of these commodities to rise. If a post-war environment leaves Iran with geopolitical leverage over who and what exits the Strait (a strong possibility), pricing pressures will remain. Moreover, damage already done to oil and gas facilities across the Gulf States, including the United Arab Emirates, Qatar, and Saudi Arabia, will take time to repair. Beyond the Persian Gulf, the Iran war demonstrates that a wide range of countries have vulnerable oil and gas supply chains.

Why the Southern Caribbean Has an Advantage

Considering the above, five factors will weigh heavily on the Southern Caribbean. 

First and foremost, political risk for the three Caribbean countries is much lower than in the Persian Gulf. All three states are democratic and market-oriented and generally are supportive of US positions. There are no major insurgencies, and elections occur on a regular and often fiercely contested basis.

Venezuela represents a major security risk to Guyana, claiming 74 percent of the country. However, Guyana exports oil to the US and hosts large US multinationals such as ExxonMobil and Chevron. As both the Biden and Trump administrations have demonstrated, there is little chance the United States would not back Guyana if the territorial issue becomes aggravated. There are no such territorial threats (on the same scale) against Suriname and Trinidad and Tobago, but these states offer something the United States wants: safe and secure supply chains.

Second, the Southern Caribbean Energy Matrix countries will have to come to terms with a Venezuela under new management. Territorial claims aside, Venezuela is part of the oil-rich Guiana Shield, which also encompasses Guyana, Suriname, French Guiana, and Brazil. The big question is whether Venezuela can be integrated into the Southern Caribbean Energy Matrix or remains a rival or ongoing threat. The current government in Caracas, headed by Delcy Rodríguez, is benefiting from improved relations with the United States, which align with US national security strategy’s emphasis on oil and the Western Hemisphere. That said, does US hegemonic dominance over Venezuela last (probably in the short term), which is capable of dampening Caracas’s territorial claims on Guyana?

Third, the post-Iran war era will place greater emphasis on geoeconomics. The Southern Caribbean is much closer to the United States than the Persian Gulf. The United States gets most of the crude oil it uses to meet specialized refining needs from Canada and Mexico, with Saudi Arabia as the leading Persian Gulf source. Along with Venezuela and Brazil, another key exporter to the US market, Guyana, is in the Western Hemisphere and already exports to the United States. Additionally, Trinidad and Tobago already supports New England’s LNG needs.  

Fourth, the Caribbean in general faces a different environment for inter-state relations with the United States—the importance of regional blocs such as the Caribbean Community (CARICOM) is being downplayed, and Washington is inclined to deal with each country on a transactional basis. While this may not suit countries like Antigua and Barbuda, Grenada, or St. Vincent and the Grenadines, it plays to the advantage of Guyana, Suriname, and Trinidad and Tobago. In a transactional world order where the benevolent hegemon has left the stage, they have something that the hegemonic power wants—oil and natural gas. And other parts of the world want what the Southern Caribbean Energy Matrix has to offer—energy-hungry India and Europe. Of Guyana’s crude oil exports in 2025, the major destinations were the Netherlands, the United Kingdom, Panama, Spain, Italy, and the United States.   

The transactional game has already started. This was evident in the US move to tackle transnational crime organizations and the ouster of Venezuela’s Maduro. While most Caribbean countries (except the Dominican Republic) were not open to hosting US equipment and personnel, and CARICOM stressed the need for more diplomacy with Caracas, Trinidad and Tobago allowed the US military access for a brief period. Trinidad and Tobago’s Prime Minister Kamla Persad-Bissessar indicated that her support for the US effort was temporary and driven by the need to tackle narco-trafficking and gun smuggling, much of it coming out of Venezuela. 

Trinidad and Tobago’s more cooperative policy vis-à-vis the United States appears to have had rewards. The US Office of Foreign Assets Control (OFAC) greenlighted its approval for a new OFAC license for the National Gas Company of Trinidad and Tobago (and Shell) to jointly develop the Dragon gas field with Venezuela’s state-owned oil company PDVSA. As Trinidad and Tobago’s Minister of Energy and Energy Industries, Roodal Moonilal, noted, the greenlight from OFAC “…support progress on cross‑border gas initiatives that will allow gas from Venezuelan fields to be transported through our upstream infrastructure, into Trinidad and Tobago’s energy system. This creates a pathway for additional gas supply to reach Atlantic LNG and the petrochemical sector, bolstering long‑term energy security and supporting economic stability.”

The Southern Caribbean energy matrix also has a significant geopolitical dimension. The US assertion that the Western Hemisphere is the United States’s sphere of influence reflects a deep concern that external powers in the Caribbean, like China, Russia, and Iran, need to be countered. This line of thinking was evident in the late March 2026 speech given by Washington’s Chargé d’Affaires at the US Embassy in Paramaribo, Paul Watzlavick: “It is increasingly clear that this region is an essential partner to the US. We want partnerships that support a strong workforce, keep our people safe, and respect the sovereignty of every country.” To the geopolitical aspects, he also stated: “The Western Hemisphere is our home—we are your neighbors. We want a neighborhood that is not manipulated by outside powers that do not share these goals.” 

China, which is active throughout the Caribbean via economic statecraft focused on critical infrastructure and developing business and cultural ties, is the obvious target of Watzlavick’s comments. However, considering China’s voracious appetite for oil and gas, Beijing has little inclination to shrink its presence in the Caribbean despite the loss of its closest regional ally in Venezuela. Chinese companies have a footprint in Guyana through the oil sector and infrastructure. Indeed, China Road & Bridge Corporation is constructing a $236 million bridge across the Corentyne River to connect Guyana and Suriname.

China is also playing a role in supplying Caribbean countries with wind and solar equipment needed to diversify away from their overwhelming dependence on oil. By its push against renewable energy options, the United States is conceding a competitive advantage to China, which is the lead supplier of key renewable energy inputs, such as solar panels, wind turbines, and batteries for cars and trucks. China has been particularly active in Cuba, but it is also supporting renewable ventures elsewhere in the Caribbean. 

Fifth, the post-Iran war period offers the potential for the Southern Caribbean Energy Matrix countries to create something very different from the past from the perspective of historical commodity development. While oil and natural gas are likely to remain central to Guyanese, Surinamese, and Trinidadian development for the next two decades (possibly longer), their combined energy foundation opens the door to creating a geoeconomic structure similar to that pursued by the Gulf States. Well aware that long-term dependency on oil and gas will not leave a viable economy in place, countries such as Saudi Arabia, Qatar, the United Arab Emirates and Kuwait are using their sovereign wealth funds to shift away from oil and gas production to an increasingly wider range of economic activities—at the industrial level with petrochemicals, fertilizers and aluminum production as well as an upper level based on financial services, technology, manufacturing and tourism. As a World Economic Forum report notes: “Through strategic initiatives, transformative programs, modern infrastructure,” the Gulf States are seeking “a high quality of life that is driving significant investment, and attracting and retaining top talent to ensure a prosperous future.” The Iran war has cast a long shadow over this economic strategy in the Persian Gulf, but it does not preclude a similar development in the Southern Caribbean. 

The Southern Caribbean countries are behind their Persian Gulf counterparts in terms of standard of living, educational manpower, and ability to attract talent. To be fair, efforts are being made to change this. Suriname’s Inter-American Development Bank is supporting a project to introduce educational technology kits and enhance digital skills in 65 percent of primary and lower secondary schools. Guyana and Trinidad and Tobago are pursuing similar programs. 

There is another dimension in the post-Iran War era—the need to advance renewable energy development. Climate change is a major consideration: Georgetown, Guyana’s capital, is expected to be underwater by 2030. Suriname and Trinidad and Tobago face similar concerns over rising sea levels, extreme heat, floods, and droughts. The development of oil and gas and their byproducts poses challenges related to pollution. 

The Future of the Southern Caribbean Looks Bright

Despite a changing international geopolitical system based more on transactional relations, pressing needs in education and infrastructure, and climate change, the Southern Caribbean sits on the edge of what could be an economically stronger, more broadly developed regional economy. Prudent management of resources could see the use of oil and gas wealth invested into education, infrastructure, and economic diversification, including agriculture and financial services. It could also provide funding to maintain Guyana’s and Suriname’s forests, which serve as critical global carbon sinks. This could also see the revitalization of the bauxite and aluminum sectors (which would pull bauxite-rich Jamaica into the economic fold). Curaçao and Barbados, both with well-educated populations, could also be pulled into the matrix, serving as part of a broader financial and tech hub. 

While some may regard the above as science fiction, the same was said when the Persian Gulf downgraded the importance of oil and gas in favor of finance, tech, and tourism. However, as the United States has shifted from a benevolent hegemon to a transactional—and less dependable—force, and the post-Iran war world is going to be volatile, the geoeconomic advantages of the Southern Caribbean are going to be more pronounced. As the American advertising pathfinder Leo Burnett (1891-1970) stated: “When you reach for the stars you may not quite get one, but you won’t come up with a handful of mud either.” 

About the Author: Scott B. MacDonald

Dr. Scott MacDonald is the chief economist for Smith’s Research & Gradings and a fellow with the Caribbean Policy Consortium. Prior to those positions, he worked for the Office of the Comptroller of the Currency, Credit Suisse, Donaldson, Lufkin and Jenrette, KWR International, and Mitsubishi Corporation. His most recent book is The New Cold War, China and the Caribbean (Palgrave Macmillan 2022).

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