Oil Wars and OPEC+ Price InfluencePart 1: Oil as a Geopolitical Weapon
Oil and Global Power
Ever since oil replaced coal as the primary energy source in the early 20th century, it has been intertwined with national security, industrial growth, and military power. The British Navy’s decision in 1912 to shift from coal to oil was a strategic move that highlighted the importance of securing reliable petroleum supplies. From World War I to the Iraq wars, oil has dictated alliances, interventions, and even regime changes.
Countries with abundant oil—like Saudi Arabia, Russia, Iraq, and Venezuela—have leveraged their reserves for geopolitical clout. Conversely, nations dependent on oil imports, like the United States, China, Japan, and India, have structured much of their foreign policy around securing energy supplies.
Oil Wars: A Historical Overview
“Oil wars” are not always literal wars fought exclusively for oil, but rather conflicts where oil plays a central role in the motives, strategies, or outcomes. Some major examples include:
World War II (1939–1945): Control of oil fields was critical to the Axis and Allied powers. Germany’s failed push into the Caucasus (Operation Blue) was motivated by access to Soviet oil. Japan’s attack on Pearl Harbor was partly triggered by U.S. sanctions restricting Japanese access to oil.
The Arab-Israeli Conflicts & Oil Embargo (1973): In response to Western support for Israel during the Yom Kippur War, OPEC Arab members imposed an oil embargo. Prices quadrupled, exposing the world to the geopolitical leverage of oil producers.
The Iran-Iraq War (1980–1988): Both nations targeted each other’s oil infrastructure. Tanker wars in the Persian Gulf disrupted global supplies.
The Gulf War (1990–1991): Iraq’s invasion of Kuwait was directly linked to control of oil wealth. The U.S.-led coalition intervened not only for sovereignty but also to secure global oil markets.
The Iraq War (2003): While debated, many analysts argue that oil interests influenced the U.S. decision to invade Iraq, reshaping Middle Eastern energy politics.
Syrian Civil War (2011–present): Control of oil fields and pipelines became central for different factions, with global powers eyeing energy routes as well.
Russia-Ukraine Conflict (2014–present, escalated 2022): While largely territorial and political, oil and gas pipelines have been weapons in Russia’s economic standoff with Europe. Sanctions on Russian crude reshaped global trade flows.
These conflicts illustrate that oil wars are not simply about owning oil fields—they are about controlling global supply routes, ensuring market access, and weaponizing energy for diplomatic or military leverage.
Part 2: Birth and Evolution of OPEC
Why OPEC Was Formed
By the mid-20th century, the oil industry was dominated by Western multinational corporations—the so-called “Seven Sisters” (Exxon, Shell, BP, Chevron, Gulf, Texaco, Mobil). They controlled exploration, production, and pricing, while oil-producing nations received minimal returns.
In response, five countries—Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela—founded the Organization of Petroleum Exporting Countries (OPEC) in 1960 in Baghdad. Their goal was simple: to coordinate policies and secure fairer revenues.
OPEC’s Early Years
Initially underestimated, OPEC gained prominence after the 1973 oil crisis when Arab members used production cuts and embargoes as political tools. This event showcased OPEC’s ability to shock the global economy. Oil prices skyrocketed, inflation surged worldwide, and industrial nations realized their vulnerability.
In the 1980s, however, OPEC’s unity was challenged. Internal rivalries, cheating on quotas, and external pressures (like North Sea oil discoveries) weakened its control. Yet, OPEC retained the role of a “swing producer,” particularly through Saudi Arabia, which used its massive spare capacity to balance markets.
Part 3: OPEC+ and the Modern Oil Market
The Birth of OPEC+
By the 2000s, OPEC alone could not fully control prices due to the rise of non-OPEC producers, especially Russia, the U.S. (shale oil), and Canada. In 2016, in the aftermath of the oil price crash triggered by shale oil oversupply, OPEC allied with non-OPEC producers, most notably Russia, Kazakhstan, and Mexico, forming OPEC+.
This alliance was critical in rebalancing markets through coordinated production cuts. Russia brought immense weight to the group as the world’s second-largest crude exporter, while Saudi Arabia retained its role as leader.
How OPEC+ Influences Prices
OPEC+ does not directly set prices; instead, it influences them through production targets. By cutting supply, they push prices up; by raising production, they cool markets. Key mechanisms include:
Production Quotas: Members agree on collective output ceilings.
Spare Capacity: Saudi Arabia and UAE often adjust supply to stabilize markets.
Market Communication: Even announcements and forward guidance move prices, as traders react to perceived scarcity or abundance.
Emergency Meetings: OPEC+ convenes when crises—such as the COVID-19 pandemic or Russia-Ukraine war—disrupt markets.
Major OPEC+ Interventions
2016 Production Cuts: After oil crashed below $30 per barrel, OPEC+ cut 1.8 million barrels per day (mbpd), reviving prices.
COVID-19 Crash (2020): Oil demand collapsed, and at one point, U.S. crude futures went negative. OPEC+ enacted historic cuts of nearly 10 mbpd to stabilize markets.
Russia-Ukraine War (2022): With sanctions on Russia, OPEC+ resisted Western pressure to raise output, choosing instead to support Russia and maintain stability for producers. Prices surged above $120 before stabilizing.
2023–2025 Cuts: OPEC+ has continued voluntary cuts, particularly by Saudi Arabia and Russia, to defend price levels against slowing global demand and rising U.S. shale output.
Part 4: Oil Wars Meet OPEC+—A Symbiotic Relationship
Oil wars and OPEC+ decisions often overlap. For instance:
During the Iran-Iraq War, OPEC struggled to maintain unity as members fought each other.
The Gulf War pushed OPEC to stabilize supply after Kuwait’s oil fields were set ablaze.
The U.S.-Russia standoff over Ukraine has forced OPEC+ to navigate geopolitical divisions while maintaining production discipline.
Thus, OPEC+ not only manages economics but also absorbs the shocks of oil wars, sometimes exploiting them to strengthen its influence.
Part 5: The Economics of Price Influence
Why Prices Matter
Oil is not just a commodity; it’s a macroeconomic driver. Prices affect:
Producer Nations: High prices boost revenues for OPEC+ states, funding budgets and political stability. Low prices create deficits and unrest.
Consumer Nations: Importers like India, China, and Europe face inflation, trade deficits, and currency pressures when oil rises.
Global Trade: Since oil is priced in dollars, higher prices strengthen the U.S. dollar and worsen debt burdens for emerging markets.
The Price Band Strategy
OPEC+ has often targeted a “comfortable” price band, usually between $70 and $100 per barrel. Too low hurts their revenues; too high accelerates renewable adoption and incentivizes rival production. The art of OPEC+ strategy lies in maintaining this balance.
Part 6: Challenges Facing OPEC+
Despite its success, OPEC+ faces growing challenges:
U.S. Shale Oil: Flexible and responsive, U.S. shale producers ramp up output when prices rise, capping OPEC+’s influence.
Energy Transition: With the world shifting to renewables, long-term demand for oil may peak within decades, pressuring producers to maximize current revenues.
Internal Unity: Not all OPEC+ members comply with quotas. Political rivalries (Saudi-Iran, Russia-Saudi tensions) threaten cohesion.
Geopolitical Pressures: Western nations often accuse OPEC+ of manipulating markets, sometimes threatening antitrust actions.
Global Economic Slowdowns: Recessions and crises, like COVID-19, reduce demand, testing OPEC+’s ability to respond.
Part 7: The Future of Oil Wars and OPEC+
Looking ahead, oil will remain strategically vital even as renewables grow. Three possible scenarios unfold:
Continued Relevance: OPEC+ maintains its dominance through discipline and coordination, ensuring prices stay profitable.
Fragmentation: Internal rivalries and external competition weaken OPEC+, reducing its control.
Transition Era Wars: As global demand slows, competition for shrinking market share could trigger new oil wars, especially in regions like the Middle East and Africa.
At the same time, OPEC+ is exploring cooperation in renewable energy investments, hedging against a post-oil future. Yet for now, the cartel remains the single most important force in shaping global energy markets.
Conclusion
The history of oil is the history of power, conflict, and economic influence. From wars fought over fields and pipelines to the coordinated strategies of OPEC+, the price of oil has never been left to free markets alone. Instead, it has been molded by both bloodshed and diplomacy.
Oil wars remind us of the destructive potential when energy becomes a weapon of conflict. OPEC+ illustrates the stabilizing—or destabilizing—impact of collective price management. Together, they show that oil is far more than fuel; it is leverage, influence, and survival.
As the world transitions toward cleaner energy, the influence of oil may eventually decline. But in the foreseeable future, oil wars and OPEC+ price influence will remain at the core of global economics and geopolitics—deciding the fates of nations and the rhythm of the world economy.
