US-Iran Relations: How 70 Years of Conflict Move Oil Prices and Global Markets

How a 1953 coup, oil crises, and proxy wars created the Middle East's most expensive grudge match—and what it means for your portfolio

Wall Street loves a good drama, but the U.S.-Iran relationship? That's not drama—that's a decades-long soap opera with nuclear weapons and oil tankers. After Israel and Iran's 12-day conflict in June 2025 ended in a fragile ceasefire, investors are asking the million-barrel question that's already sent crude prices up 8%: Will Tehran finally play nice with Washington, or are we headed for another round of "Maximum Pressure: The Sequel"?

Here's the thing Southeast Asian investors need to understand: This isn't just about Middle Eastern politics. When Iran and America square off, oil prices swing, defense stocks rally, and safe-haven assets from gold to the Japanese yen start looking very attractive to nervous fund managers from Singapore to Seoul.

The Ghost of 1953: Why Iran Still Doesn't Trust America

To understand why Iran acts like that friend who never got over being betrayed in high school, you need to go back to 1953. Picture this: Iran's democratically elected Prime Minister Mohammad Mossadegh decides to nationalize the country's oil industry, kicking out British petroleum companies. The response? A CIA-backed coup that restored the Shah's monarchy and kept Western oil flowing.

For Iranians, this wasn't just politics—it was proof that America would topple governments whenever its interests were threatened. Fast-forward through the 1979 Islamic Revolution, the eight-year Iran-Iraq War (where Saddam Hussein used chemical weapons with tacit Western support), and you've got a country that views every American diplomatic overture like a Trojan horse.

Think of it this way: If your business partner once helped your competitor steal your company, would you trust their next "partnership proposal"? That's Iran's default setting with America.

The Economic Stranglehold: When Sanctions Become Self-Defeating

Here's where it gets interesting for markets. The U.S. has basically treated Iran like that kid in school everyone stopped talking to—except this kid controls some of the world's largest oil and gas reserves. American sanctions have cut Iran's oil exports from 2.5 million barrels per day in 2018 to roughly 1.5 million today, but here's the plot twist: Iran has gotten very good at sanctions evasion.

Chinese refineries are still buying Iranian crude through elaborate shell games involving ship-to-ship transfers and fake documentation—a shadow trade worth an estimated $30-40 billion annually, according to energy intelligence firms. It's like a global game of financial hide-and-seek, except the stakes involve energy security for the world's second-largest economy.