The vulnerability of the world economy to oil prices was painfully visible in the first half of 2026 following the US and Israel war against Iran. The power of this commodity to upend economies has been apparent before. In his recently published book Crude Capitalism: Oil, Corporate Power, and the Making of the World Market, political economist Adam Hanieh provides an expansive history of the connections between oil and capitalism since the 1800s. Economist Imraan Valodia asked him about the book.
What was your motivation for writing this book?
A main motivation was a dissatisfaction with many of the standard ways of discussing the history of oil and its place in the global economy. Much of the dominant narrative around oil tends to invest it with some kind of innate power, separate from the social and economic logics of capitalism.
What I try to do in the book is foreground what these are. Things like the drive towards endless accumulation, the incessant speeding up of production and consumption, mechanisation and so forth. And I ask how these qualities have served to centre oil in our energy system.
So the book is not just a history of oil, but a history of capitalism seen through oil.
I also wanted to move beyond histories that are overwhelmingly focused on the US. It is obviously crucial to the story. But our oil-centred world was made through wider global relations. These included colonial extraction, the development of the Soviet oil industry, the transformations of post-Soviet Russia and, more recently, the rise of China and East Asia as central nodes in global energy demand, refining and petrochemical production.
Another major concern of the book is tracing what oil becomes after it is pumped from the ground, beyond simply a liquid transport fuel. So I examine areas such as the petrochemical industry (plastics, fertilisers, synthetic fibres and so forth) as well as oil’s crucial place in the contemporary financial system.
How important was the rise of the oil industry in the US, specifically the rise of Standard Oil?
Standard Oil (1870-1911) was owned by the Rockefellers. It established many of the organisational forms that would later define the global oil industry. John D. Rockefeller’s key insight was to grasp the power that came from controlling the whole value chain through which oil moves. Standard Oil integrated refining, transport, storage, pipelines, marketing and finance into a single corporate structure. It used its command over railroads and later pipelines to squeeze competitors, lower costs and shape the market around itself. Much of the subsequent history of the oil industry revolves around this basic lesson – corporate power comes from vertical integration, and the ability to control the infrastructures through which oil circulates.
The corporate structures built up around Standard Oil were closely connected to the wider architecture of American capitalism. Tax systems, corporate law, banking, capital markets and state policy all became central to how oil companies grew and operated. The later global dominance of US oil firms was built on these wider innovations, and remained closely tied to support from the US state.
We can see the legacy of this today. Many national oil companies, especially in the Gulf monarchies, are now pursuing similar strategies of vertical integration.
When did the Middle East emerge as a key player?
Anglo-Persian Oil Company (APOC), which was founded by Britain in 1908, exemplified the relationship between oil extraction and colonialism. The company’s rise in Iran depended on concessionary agreements protected by imperial power. Britain’s interest in Persian oil was closely tied to the needs of empire, especially the fuelling of the Royal Navy.
APOC became a way of linking Middle Eastern oilfields to British military and industrial strength. This set a precedent for the wider Middle East, where a handful of foreign oil companies sought long-term control over oil reserves, infrastructure, pricing and export routes.
This also shaped the subsequent political history of the Middle East. Oil became a focal point for struggles over sovereignty because foreign control of the industry revealed the limits of formal independence. Producer governments were often constrained by companies that controlled technical expertise, transport, marketing and access to world markets. In response, different forms of oil nationalism emerged, from demands for a greater share of revenues to full nationalisation.
Iran’s attempt to nationalise oil in 1951 under Mohammad Mossadegh is the most famous example. But the broader pattern was regional. Across the Middle East, oil became a battlefield for states and nationalist forces to challenge colonial domination and foreign corporate power.
The formation of the Organization of the Petroleum Exporting Countries (Opec) in 1960 and the later rise of national oil companies has to be understood against this background.
Who was the industrialist Calouste Gulbenkian (1869-1955)?
He sits at the intersection of finance, empire and the making of the modern oil industry. He was an Armenian businessman born in the Ottoman Empire, educated partly in Europe, who became one of the most influential intermediaries of early 20th-century oil. His nickname, “Mr Five Per Cent”, came from the 5% stake he secured in the Turkish Petroleum Company, the consortium that eventually gained control over Iraq’s oil. Unlike the other members of that consortium, Gulbenkian did not own a major oil firm, but he was able to broker the agreements through which the big western companies divided up access to Middle Eastern reserves. He was also very skilled at writing himself into history in dramatic and fanciful ways.
He is especially associated with the 1928 Red Line Agreement, in which the main shareholders of the Turkish Petroleum Company agreed not to develop oil independently across much of the former Ottoman Empire without the others. This was a key moment in the cartelisation of world oil, in which the control of oil (including pricing) came under the sway of a handful of large firms. The Red Line Agreement linked Middle Eastern oil to these international oil companies who fully managed production, prices and market access on a global scale. Gulbenkian’s 5% share is thus a window into how the oil industry was built through networks of imperial diplomacy and corporate collusion at the time of the break-up of the Ottoman Empire.
What were the implications of the 1973 oil shock, during which oil prices quadrupled following an embargo by some Arab oil producing states?
It marked a rupture in the world economy because it revealed that the old structure of the international oil industry was no longer sustainable. For much of the 20th century, the global oil industry was controlled by just seven western companies, the so-called Seven Sisters. They controlled the extraction of oil in the Middle East and elsewhere, as well as its refining, pricing, transport and marketing. But by the early 1970s, this system was being challenged by producer governments, especially in the Middle East and Latin America, and by the growing assertiveness of Opec.
The dramatic increase in oil prices after 1973 was a sign of this shift in power towards oil-producing states.
The implications were enormous. Higher oil revenues generated vast financial surpluses in the Gulf and other producer states, and these surpluses were managed and invested through the international financial system. They were recycled through US and European banks, invested in dollar-denominated assets, placed in US Treasury securities, and channelled into equities, real estate and other financial markets. This helped strengthen the position of the dollar and deepened the role of American financial institutions in the world economy. In this sense, the oil shock played a major role in creating the global financial architecture that we live with today.
Saudi Arabia was especially important in this process. The consolidation of the US-Saudi relationship in the 1970s linked oil, finance and military power very tightly together. Oil continued to be priced in dollars, which reinforced global demand for the US currency. Gulf surpluses flowed into American markets, while the Gulf monarchies became major purchasers of US weapons and military services. The consolidation of oil as the world’s leading fossil fuel was therefore increasingly intertwined with the reproduction of American power.
Why are you critical of the net zero emissions framework that’s key to climate change policy?
My criticism of the “net zero” concept is that it makes the climate crisis appear as a technical or accounting challenge, rather than a systemic crisis rooted in the dynamics of capitalism itself. The term entered the mainstream climate policy vocabulary through the Paris Agreement in 2015. In its basic form it means balancing ongoing greenhouse gas emissions with equivalent removals of carbon from the atmosphere. That might involve forests, soils, carbon capture and storage, or technologies that directly remove carbon from the air.
The problem is that this shifts attention away from the urgent need to reduce fossil fuel production and consumption in absolute terms. It allows companies and governments to say they are moving towards “net zero” while still expanding oil and gas extraction, as long as those emissions are, in theory, offset somewhere else.
Many net zero strategies rely heavily on carbon capture and storage. This technology remains unproven at the scale required to deal with the volume of emissions produced by global fossil fuel use. Historically, carbon capture has often been used for oil recovery: captured carbon is injected into oilfields to extract more oil. So a technology presented as a climate solution actually becomes a means of extending fossil fuel production. Another important example of a false “solution” presented within the net zero framework is carbon offset projects. These turn forests and other ecological systems into financial assets that can be counted against emissions elsewhere. These projects have been linked to land dispossession and numerous scandals, including some across the African continent, and often rely on highly dubious accounting schemes.
The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.