Perhaps letting Iran, a country ruled by fanatics, build enough military infrastructure to the point that they're able to hold a significant part of the world's energy hostage was the original blunder?

You could argue they'd never use their power unless attacked, but I don't think you can be certain of that. It comes down to if you can accept that a non-rational actor can be allowed to have this power (or nuclear weapons for that matter).

Now that the cat is out of the bag it would be a terrible idea not to finish the job and make sure Iran doesn't have this power ever again.