Crude oil is arguably the single most strategically important commodity in the modern global economy. It is the lifeblood of transportation systems, the feedstock for plastics and petrochemicals, and a primary source of heating and electricity generation for billions of people worldwide. The price of oil ripples through virtually every sector of the economy — from airline profitability and manufacturing costs to food prices and government revenues in developing nations. Because of this pervasive influence, the question of who sets the price of oil is not merely an economic one; it is deeply political, geopolitical, and developmental in nature.
For most of the twentieth century, the answer to that question was either ‘the major Western oil companies’ or ‘OPEC.’ From the 1920s through the 1950s, global oil markets were dominated by what became known as the ‘Seven Sisters’ — a group of Western multinational oil corporations including Standard Oil of New Jersey (later ExxonMobil), Royal Dutch Shell, Anglo-Persian Oil (later BP), Standard Oil of California (Chevron), Texaco, Gulf Oil, and Socony-Vacuum (Mobil). These firms controlled nearly all aspects of global oil production, transportation, refining, and marketing, and they set prices largely to maximize their own profits, often at the expense of the oil-producing nations in which they operated.2