Geopolitics of Oil: Resource Control and Global Power Dynamics

Vessels, pipelines, and refineries illustrating the global geopolitics of oil, showcasing the intricate dynamics of resource control and transportation in the energy sector.

Oil has underpinned global power for over a century. In World War II, Allied strategy explicitly included securing oil resources, and postwar politics centered on access to Gulf oil. In 1960 the leading exporters (Iraq, Iran, Kuwait, Saudi Arabia, Venezuela) formed OPEC. The 1973 Arab oil embargo – in retaliation for Western support of Israel – quadrupled oil prices and halted exports to the US, Japan and Europe, triggering global recession and inflation. A second shock in 1979 (Iranian Revolution) again spiked prices. The 1980s–90s saw oil-centered conflicts: for example, Iraq’s 1990 invasion of Kuwait (motivated by Kuwaiti overproduction undermining oil revenue) prompted a U.S.-led war to defend Gulf supplies.

Throughout the late 20th century, Western powers cultivated ties with major “petrostates” (e.g. US-Saudi military alliance) to secure stable oil flow. Thus, oil shaped alliances and conflicts: producers (OPEC and others) wielded collective pricing power, while consumers (the U.S., Europe, Japan) sought diversification and security. For instance, oil revenues financed regime ambitions (Iran’s military and proxies receive “billions of dollars’ worth of oil” each year), highlighting oil’s role in power projection.

Cars queue at an Oregon gas station during the 1973–74 oil crisis. Arab OPEC members cut exports and raised prices, triggering global recession and oil-conservation policies.

Recent Geopolitical Developments

Middle East

The Middle East remains the world’s largest oil-export region, so regional conflicts create market jitters. The 2023 Israel–Hamas war and related tensions (Houthi attacks on Red Sea shipping, proxy clashes involving Iran and Gulf states) have raised concerns about supply disruptions. In practice, however, these shocks have had limited direct effect on flows. The IEA noted the Israel-Hamas conflict had “no direct impact on oil flows”, though markets quickly priced in risks: Brent futures jumped about $4/bbl after the October 7 attack, to ~$87. By late 2023, robust output from non-OPEC producers (notably U.S. shale and Brazil) and demand uncertainties kept prices relatively contained; Brent ended 2023 below $80 despite ongoing wars.

Nevertheless, any escalation (e.g. a Gulf-wide flare-up or Iranian strike on oil infrastructure) could rapidly tighten markets. OPEC (with its Middle Eastern members) continues to play a balancing role: for example, OPEC + (including Gulf producers) announced coordinated production cuts in 2023, a move the IEA warned “risks exacerbating” supply tightness and lifting prices amid inflationary pressures.

Russia–Ukraine War

Russia has emerged as a key pivot in oil geopolitics. In 2022 Russia was the world’s third-largest oil producer (≈10.3 mb/d, ~13% of global output). Following its invasion of Ukraine, Western sanctions (EU oil import bans, G7 price caps, insurance restrictions) aimed to cut Moscow’s oil revenues. These measures initially squeezed Russia’s production – U.S. analyses noted Russian output fell about 9% in April 2022 due to sanctions and company withdrawals. Over time, Russia adapted by rerouting exports to Asia (notably China and India) using new shipping routes and discounts. Crucially, Europe has nearly completed a decoupling from Russian oil: by late 2023 Russia’s share of EU oil imports plunged to only ~3.5% (from 24.8% in late 2021).

This dismantles much of Russia’s previous leverage as an “energy weapon” over Europe. Global markets also tightened in 2022: reduced Russian supply helped send oil over $100/bbl, fueling worldwide inflation. Commodity importers (Europe, Asia, Africa) bore the brunt of higher fuel costs, while exporters benefited from windfall revenues. Overall, Russia’s war has reshuffled trade flows but underscored oil’s geopolitical weight – even while signaling that large producers can be partially sidelined by alliances.

Africa and Other Emerging Producers

African oil exporters (Nigeria, Angola, Libya, Algeria, Congo, etc.) have increasing influence but face challenges. On one hand, Africa holds significant reserves (OPEC members Nigeria/Angola plus emerging fields in East/Central Africa). On the other, production is often volatile due to political unrest and infrastructure gaps. For example, Nigeria’s once-mighty Niger Delta fields are plagued by militancy, spills and corruption: peak exports of ~2 mb/d collapsed, and major companies are divesting onshore assets. Libya’s output has swung with civil conflict. Consequently, African producers have struggled to raise market share.

Meanwhile, major consumers are rebalancing supply sources. Notably, China – traditionally Africa’s biggest oil customer – has reduced African imports. Between 2019 and 2023, Chinese oil purchases from key African suppliers fell sharply (Nigeria down ~61%, Angola far more) as China diversified into Middle East and Russian crudes. Only a few (Chad) saw export gains. Thus China’s energy diplomacy is tilting away from Africa, even as it invests in African mining and oil infrastructure more broadly.

In Latin America, new producers are emerging: Guyana’s offshore boom has lifted its output rapidly to 0.64 mb/d by 2024, making it one of the world’s fastest-growing producers. Brazil continues expanding deepwater production (outlook 4–5 mb/d by late 2020s in some forecasts). Venezuela remains large in reserves but crippled by sanctions and mismanagement – 2025 US sanctions (new tariffs, license revocations) have already cut its exports 11%. Governments of rising producers (Guyana, Brazil) are using oil wealth for development and diversifying trade partners. Overall, while Africa and Latin America have substantial resources, their geopolitical clout in oil depends on stability, investment, and buyer diversity.

United States

The U.S. shale revolution has dramatically reshaped oil geopolitics. Since 2018, the U.S. has led the world in crude production. In 2023 the U.S. averaged 12.9 mb/d (crude+condensate), a record high. By comparison, no other country has broken 13 mb/d. U.S., Russia and Saudi Arabia together now account for ~40% of global oil output. Rising U.S. output softened OPEC’s market power and inspired the 2016 formation of OPEC+: Saudi-led producers invited non-OPEC states (notably Russia) to coordinate supply, countering volatile prices from surging U.S. shale. Politically, the U.S. wields oil power via sanctions and diplomacy: it banned Russian oil imports in 2022 and has imposed sanctions on Iranian and Venezuelan oil to pressure those regimes. The U.S. has also leveraged its Strategic Petroleum Reserve (releasing barrels to curb price spikes) and uses oil agreements to bolster allies (e.g. recent partnerships to stabilize European energy supplies).

The Role of Oil in Energy Security and Economic Stability

Oil is a cornerstone of modern economies, so controlling it is integral to energy security. IEA member states must stockpile oil equivalent to at least 90 days of imports and jointly respond to disruptions (e.g. coordinated SPR releases). Sudden oil shocks have outsized economic effects: they fueled the “stagflation” of the 1970s and, after 2022’s war shock, contributed to renewed global inflation. The IMF observed that commodity (fuel and food) price spikes from conflicts have “propagate[d] far and wide”, hurting importers’ growth and inflation. In 2022–2023, higher oil prices depressed growth in consuming countries (Europe, Asia, Africa) even as hydrocarbon exporters’ GDPs surged. For economic stability, oil revenues can make or break governments: budget deficits in oil-dependent states jump when prices fall, potentially spurring unrest; conversely, high oil revenues can finance long-term investments or, if mismanaged, corruption and conflict.

Global Industries in Motion: An illustration capturing the dynamic flow of goods and energy, highlighting enormous cargo ships traversing the oceans, airplanes flying above, an extensive network of pipelines, and towering storage facilities, all showcasing the infrastructure that supports international trade and energy distribution.

The need to avoid such risks has prompted many nations to diversify: energy importers are expanding renewables and fuel-efficiency standards, while producers (e.g. Saudi Vision 2030, UAE reforms) invest oil wealth into non-oil sectors. Nonetheless, as long as oil remains a major import for developing Asia and others, control over oil resources and routes continues to be a strategic economic issue worldwide.

Oil as a Sanctions and Foreign Policy Tool

Oil exports have long been leveraged for political ends. Sanctions on oil sales are a prominent instrument. The U.S. and EU have imposed oil-sector sanctions on Iran and Venezuela to penalize government behavior. For example, recent U.S. measures target Iran’s entire oil supply chain – including dozens of tankers, brokers and foreign facilitators – explicitly aiming to cut Iran’s exports to zero. Treasury officials note the U.S. will “use all our available tools” on anyone dealing in Iranian oil. Similarly, U.S. tariffs and license revocations on Venezuela’s state oil firm (PDVSA) in 2024–25 have already reduced its exports (down ~11.5% in March 2025).

These “secondary” sanctions also caution foreign (Chinese, Indian, European) companies against buying the oil, effectively weaponizing trade. Russia, too, faces energy sanctions (price caps, transport bans). Yet in each case, target states and their buyers seek workarounds (e.g. “shadow” tankers, barter deals), blunting but not nullifying the leverage.

Conversely, oil-producing countries can use production as geopolitical pressure. Saudi Arabia and its OPEC+ partners have on occasion hinted at withholding output to influence global politics. In April 2023, for instance, OPEC+ announced deep production cuts, a move the IEA warned would exacerbate market tightness and inflation.

Such coordinated cuts, or conversely output increases, serve as crude-power diplomacy. During the Cold War the U.S. often viewed OPEC price moves as hostile (as U.S. presidents from Ford through Trump criticized the cartel). Today, collaboration forums (IEA–OPEC consultations) exist, but “oil weaponization” remains a sensitive issue. Overall, oil’s use as sanction or pressure reflects its unique status: major economies remain vulnerable to price swings and supply risks, making oil both a target and tool of statecraft.

Outlook: Transition and Shifting Resource Control

In the coming decades, the geopolitics of oil will evolve under energy transition pressures. Global oil demand growth is slowing: according to the IEA, vehicle efficiencies and electric vehicles may cause oil use (especially in transport) to peak after 2028. In a “Net Zero by 2050” scenario, oil demand barely rises to 2030, as shifts to low-carbon fuels accelerate. However, oil will remain vital for years – especially for aviation, shipping, petrochemicals, and in emerging economies. Thus, resource control is not disappearing overnight. Still, as renewable energy and EVs expand, the relative power of traditional oil exporters may wane. Countries like Saudi Arabia are already diversifying economies to hedge against long-term demand drops.

Meanwhile, new technologies and resources are creating new geostrategic landscapes. Control over critical minerals (lithium, cobalt, etc.) for batteries is becoming as crucial as oil for some stakeholders. And LNG (natural gas) has taken on greater geopolitical weight post-2022. For oil specifically, the ongoing secular trend suggests demand growth will shift toward non-OECD Asia (China, India, Southeast Asia) even as Europe and the Americas reduce use. Producers in friendly or unstable regions will jockey for market share. For example, Africa’s relative stability and proximity to Europe could become more important if Middle East flow is perceived as riskier. In Latin America, fields like Guyana’s offshore will bolster regional significance.

In summary, oil remains a bedrock of global energy and power politics, but its role is changing. Established importers and exporters alike are adapting to a future where fossil fuels face competition. While the era of oil shocks may recede, legacy energy ties (alliances built on petroleum) and the wealth embedded in reserves mean that oil will continue to shape international relations — even as the balance gradually shifts toward cleaner energy.

Sources: Scholarly and industry analyses from IEA, EIA, IMF and others (2022–2025) including IEA Oil Market Reports, government and think-tank studies, and news reports, as cited above.