Somaliland's Rising Strategic Role in U.S. Oil and Military Policy
Oil bulls have finally found some relief as crude prices rallied to multi-month highs, driven by escalating tensions between Israel and Iran, which continue to trade attacks in one of the region's most volatile periods in recent years. As of Tuesday morning, Brent crude for August delivery had surged $9 from a week earlier to reach $75 per barrel, with WTI following suit.
Prices, which had remained under pressure much of the year due to concerns over oversupply and flagging demand, are now being buoyed by the specter of widening geopolitical instability, even in the absence of major supply disruptions.
Much of the market's anxiety centers on potential threats to the Strait of Hormuz and Red Sea shipping routes, both of which are critical chokepoints for global oil flows. Recent negotiations have aimed to reduce the risk of major disruptions, but traders remain on edge.
Amid these uncertainties, a lesser-known but strategically vital player has begun to attract growing attention: Somaliland.
In April, U.S. forces reportedly used Somaliland's coastline as a staging area for operations targeting Houthi positions in Yemen. Somaliland, a self-declared republic of around 5 million people in the Horn of Africa, has maintained relative stability for over three decades, complete with functioning institutions and regular democratic elections. However, it remains unrecognized internationally, as Washington has long adhered to a "one Somalia" policy. That stance may be shifting, with some policymakers in Washington reportedly contemplating a change.One influential policy blueprint, Project 2025, advanced by the Trump administration, suggests that formal recognition of Somaliland could serve as a hedge against growing Chinese influence in neighboring Djibouti. Djibouti hosts the only permanent U.S. military base on the African continent but has also become a key node in China's Belt and Road Initiative, hosting Beijing's first overseas military base. Its location at the Bab-el-Mandeb Strait makes it a prized maritime asset.
"The U.S. and other international partners may soon have to rethink their stance on Somalia," Somaliland's new president, Abdirahman Mohamed Abdullahi, recently told The Guardian. "We are a partner in security, in counter-terrorism, and in ensuring safe marine routes for global commerce," he added. There is also speculation that Somaliland's recognition may come before 2028 as the Trump administration recalibrates its Africa policy.
Recognition could have far-reaching implications beyond geopolitics. The United Arab Emirates, through DP World, has invested over $400 million to modernize Berbera Port, which includes constructing a highway connecting Somaliland to landlocked Ethiopia. Ethiopia, in turn, has signed a memorandum of understanding that some analysts believe signals its willingness to recognize Somaliland's independence—a move that has triggered diplomatic tensions with Somalia and Egypt, who oppose Ethiopia's Grand Ethiopian Renaissance Dam project.
Beyond its strategic location, Somaliland's untapped hydrocarbon potential has also caught the attention of international investors. Norwegian firm TGS previously estimated that the Somali basin—which encompasses parts of Somaliland's onshore and offshore territories—could hold up to 30 billion barrels of oil. However, exploration efforts remain hampered by regional instability and security concerns. British-Turkish firm Genel Energy acquired exploration rights back in 2012 but has faced setbacks and been forced to suspend activities in certain areas due to emerging threats.
As global supply chains grow increasingly fragile, the international community may find itself compelled to reconsider Somaliland's status—not merely as a diplomatic footnote, but as a critical node in securing oil flows and countering rising instability in some of the world's most volatile regions.
By Alex Kimani for Oilprice.com
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