The World Markets in Oil, Gas and Coal

At the end of World War II, seven Western oil companies controlled most of the world’s oil production, and only the national oil companies of the USSR and Mexico could rival them in terms of production. These so-called ‘majors’ worked the bountiful oil fields that straddled the Persian Gulf, and their dominance helped to fuel America’s economic expansion and Europe’s recovery after the war.

The first challenge to this dominance came in 1950 when the king of Saudi Arabia negotiated an increased share in oil revenues with the U.S. majors. The following year, the new Iranian prime minister, Mohammad Mossadegh, attempted to nationalize his country’s oil. Before Mossadegh could do so, the British and American secret services engineered his overthrow in a coup d’état (Fisk 2006). In 1956, Britain again intervened to safeguard oil supply, this time joined by France and Israel, following Egypt’s nationalization of the Suez Canal, the main route for tankers sailing from the Persian Gulf to Europe. In the end, the Suez Crisis weakened Europe’s influence in the Middle East and hardened the resolve of petroleum-producing states to control their own resources. Gradually, over the next twenty years, they did so, most significantly through the establishment in 1960 of the Organization of Petroleum Exporting Countries (OPEC). By 1970, with oil production nationalized in most member countries, OPEC was in a position to control the global price of oil.