The Geopolitical Shifts Shaping the Middle East

The geopolitical transformations in the Persian Gulf, which has been primarily driven by oil. Oil, also known as “black gold,” has significantly transformed the monarchies of Kuwait, Bahrain, Qatar, the United Arab Emirates, Oman, and Saudi Arabia, making them “petromonarchies.” Oil’s influence extends to the entire international oil industry, with new players gradually gaining relevance over time.

The first oil fields in the region were discovered in Iran in 1908, followed by Iraq in 1927. The 1930s saw the discovery of fields in Bahrain, Saudi Arabia, and Kuwait, cementing the region as the world’s largest holder of oil. This led to the entry of foreign companies like the British Anglo-Persian Oil Company (APOC) and the Dutch Royal Dutch Shell.

American companies, such as Standard Oil Company of New York (Socony), took over the Gulf, while others like Standard Oil Company of California (Socal) and Texaco obtained concessions in Saudi Arabia. For nearly a century, control of the Persian Gulf’s oil reserves has been concentrated in the hands of the so-called “Seven Sisters”: Standard Oil, Gulf, Texas Oil, Socal, Socon, Shell, and APOC.

Founded and managed by entrepreneurs oriented towards profit maximization, have reduced taxes and regulations, developing a corporate diplomacy that gives their leaders extraordinary influence. However, this link between multinationals and governments appeared to weaken after 1970 due to growing competition within the oil industry and the process of emancipation undertaken by Muslim oil states.

Middle Eastern oil, once under the control of the Seven Sisters, became the target of independent oil companies like Occidental Petroleum, leading to a collapse in prices and revenues for producing states. In response, OPEC was formed, taking control of oil production, prices, and distribution. By the 1980s, most oil assets in the region had been nationalized. From 1973, OPEC countries created their own national companies, such as Bahrain National Oil Company, National Iranian Oil Company, Iraq National Oil Company, Kuwait Petroleum Corporation, Petroleum Development Oman Ltd., Qatar General Petroleum Corporation, Saudi Aramco, and Abu Dhabi National Oil Company.

Middle Eastern countries adopted a new policy independent of Western countries, characterized by a mix of Islamic extremism, emerging communist parties, and nationalist factions. Oil companies became targets of social movements seeking to regain possession of resources that had enriched a narrow circle. Some companies managed to strike profitable oil refining and distribution deals with producing countries, sparking accusations of prioritizing profits over national security. In the late 1990s, corporate and national interests began to converge again, as multinationals collaborated with politicians to boycott Iraqi oil following Saddam Hussein’s invasion of Kuwait.

A group of oil companies, have lost relevance over time, but they have remained relevant due to the increasing reliability of producing countries in managing profits from resource production and sale. In 2007, the Financial Times identified new “Seven Sisters” including Saudi Aramco, JSC Gazprom, China National Petroleum Corporation, National Iranian Oil Company, Petòleos de Venezuela SA, Petrobras, and Petronas.

The Middle East’s geopolitical dynamics reveals a fascinating and evolving picture reflecting the region’s political and economic transformations. This story serves as an emblem of the complex developments shaping the Middle East’s geopolitical landscape, highlighting the growing multipolarity, the entry of Eastern actors like China and Russia, and the independence and rise in importance of local actors in the Persian Gulf. Initially, Western states, particularly the United States, assumed the pioneering role in the oil market, exercising predominant control.

The Gulf countries have created OPEC and their own national oil companies due to their desire for autonomy and national interests. Iran and Saudi Arabia have emerged as hegemonic actors, dominating both local and regional spheres. China and Russia have also gained prominence in the oil market, while Iran and Saudi Arabia have become integral members of the “new Seven Sisters.” This development in the oil market reflects the political dynamics of the Persian Gulf, highlighting the interconnection between various spheres.

Initial Western dominance has given way to a plurality of international actors, underscoring the complexity of geopolitical and economic relations in the region. The formation of new alliances and changing power dynamics illustrate the intertwined nature of political decisions and economic transactions, shaping the overall evolution of the Persian Gulf region.

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