Edit: I assume people are missing my reasoning. Yes, water requires energy to split, but assuming you are doing some other process that ends up with a resulting split anyway, you could use the hydrocarbons as a fuel source at that stage. Think recycling, not energy production.
To do it from water for instance you could use electricity to split up the H2O molecules; you could directly use the resulting O2 or you could use the H2 to reduce the iron ore back to H2O and thus recycle the H2. Maybe you get electricity from solar panels or a nuclear reactor.
You could burn this with cosmic hydrocarbons but you have only accomplished energy storage as opposed to an energy source. You are then competing with a sun that shines all the time and every other energy storage technology as well as nuclear fission, fusion, and decay.
The oxygen rich environment is the gift we get from plants here on Earth, ultimately they have stored a lot of "energy" in the atmosphere which we can tap.
Future wildcatters will see asteroid hydrocarbons as the material to make human bodies and cattle, everything from wood to plastics to pharmaceuticals -- every bit as much of a gold rush, but not a new energy source.
If you could make plastics from asteroid materials you could blow very large films and coat them with layers of metals and semiconductors and thus function as solar sails if not energy collectors -- these could sail to their destinations on their own power, say to be installed at the Earth-Sun L1 point to fight global warming.
Anyhow it took people a long time to get oxygen right. Cave men "mastered" fire but people couldn't make steel commercially until people understood that 80% of the atmosphere is inert stuff that goes along for the ride.
I forget exactly the proportions, but... the entire point of iron-processing is to turn rust back into raw Iron (FE) by removing the O from it.
http://www.fchea.org/in-transition/2019/11/25/hydrogen-in-th...
That's partially illustrated by nuclear hydrogen engines - there is no chemistry, and the gas coming from the nozzle is actually colder than what conventional chemical rocket engine produces. Hydrogen doesn't participates in any transformations, it's purely a working fluid, yet Isp is about twice as good as with LOX-LH2 engines.
So at least adding water to burning process might sometimes improve the result.
Let's say you have oxygen from somewhere. You use the oxygen to burn hydrocarbons, to make energy and water and CO2.
To turn that into a closed cycle, you need to regenerate the water and CO2 into oxygen, to burn more hydrocarbons. The only way to do that is to add energy - on earth, we use solar energy via photosynthesis, but in space, you could use solar or nuclear energy via some chemical process.
But if you have the energy to regenerate the oxygen, why not just use it? Why make oxygen and then burn the hydrocarbons?
And why bother burning more hydrocarbons when a by-product of the regeneration process is carbon, a perfect fuel!