OPEC, International Oil, and the United States

Author:

Brew Gregory

Abstract

After World War II, the United States backed multinational private oil companies known as the “Seven Sisters”—five American companies (including Standard Oil of New Jersey and Texaco), one British (British Petroleum), and one Anglo-Dutch (Shell)—in their efforts to control Middle East oil and feed rising demand for oil products in the West. In 1960 oil-producing states in Latin America and the Middle East formed the Organization of the Petroleum Exporting Countries (OPEC) to protest what they regarded as the inequitable dominance of the private oil companies. Between 1969 and 1973 changing geopolitical and economic conditions shifted the balance of power from the Seven Sisters to OPEC. Following the first “oil shock” of 1973–1974, OPEC assumed control over the production and price of oil, ending the rule of the companies and humbling the United States, which suddenly found itself dependent upon OPEC for its energy security. Yet this dependence was complicated by a close relationship between the United States and major oil producers such as Saudi Arabia, which continued to adopt pro-US strategic positions even as they squeezed out the companies. Following the Iranian Revolution (1978–1979), the Iran–Iraq War (1980–1988), and the First Iraq War (1990–1991), the antagonism that colored US relations with OPEC evolved into a more comfortable, if wary, recognition of the new normal, where OPEC supplied the United States with crude oil while acknowledging the United States’ role in maintaining the security of the international energy system.

Publisher

Oxford University Press

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