How the Oil Lords Lost Their Grip on the World They Once Ruled
In October of 1973, the great and holy gears of geopolitics gave a rusty, ominous turn. The member states of the Organisation of Arab Oil Exporting Countries — OAPEC, for those with a fondness for acronyms that sound like prescription medications — decided they’d had enough of Western cheek. A coalition of Arab nations had attacked Israel during Yom Kippur, gambling on surprise and momentum. It worked for about ten minutes. The much smaller but considerably better-organized Israeli forces pushed them back with a mixture of desperation and the sort of military efficiency that tends to make enemies nervous and allies smug.
This humiliation sent shockwaves through the Arab and wider Islamic world. Something had to be done to make the West — particularly those nations that had lined up behind Israel — feel the sting. Tanks and soldiers had failed to turn the tide. But there was another weapon, one infinitely more subtle and infinitely more devastating: oil.
Thus began the embargo.
Six months later, when the tap was partially turned back on, oil prices had quadrupled. A 400% increase. The first true “oil shock.” The shock was not just in the numbers but in the cold, clinical demonstration of how much power the oil producers — and, by extension, their shiny new power bloc — actually wielded. Overnight, OPEC wasn’t just a club of exporters. It was a geopolitical superpower with the ability to make the world shiver in the dark.
This post first appeared in 2019, back when I still entertained hope that rational arguments might sway public sentiment. I’ve since remastered it—sharpened the edges, clarified the threat, and realigned it with the Grimwright ethos: use what works, discard the rest, and always—always—question the narrative. The date remains unchanged as a historical marker. The content does not.
The 1979 oil crisis, born of Iranian upheaval and other mid-century diplomatic misadventures, hammered the point home. Another spike. Another global scramble. And in that moment, OPEC was cemented as the alpha predator of the petroleum savannah. From then on, Western leaders approached the oil monarchs and petro-republic presidents with a mixture of flattery, cash, and diplomatic belly rubs — anything to keep those precious production valves from tightening again.
For as long as I’ve been alive, OPEC has been a kind of permanent celestial body in the sky of geopolitics — a guiding star, albeit one that often guided us straight into economic storms. I cannot remember a time when its shadow didn’t loom over global energy policy, currency stability, and the nervous twitch of every finance minister’s eye.
And yet, the seeds of its eventual undoing were planted in that very first embargo.
The Lever and the Temptation
The “oil lever” — the ability to throttle supply and spook markets into coughing up higher prices — was intoxicating. Western leaders learned that when they pushed too hard on political issues, their OPEC counterparts could push back without firing a single shot. Meanwhile, the OPEC nations themselves learned something equally seductive: manipulating production wasn’t just good for political revenge — it was also a splendid way to fatten the national treasury.
But even the early OPEC strategists understood the danger. Raise prices too high for too long and you risked what the economists called “demand destruction” — the point at which consumers either found alternatives or simply stopped consuming as much. That understanding birthed a new cottage industry within OPEC: a kind of priesthood of data analysts and market whisperers dedicated to divining exactly how far prices could be pushed before the goose stopped laying golden eggs.
Over the decades, this priesthood grew fat on charts, models, and thick annual reports written in a dialect of economics that would make most mortals weep. It wasn’t bad reading, if you had a taste for it — assuming you could find the narrative thrill in a 78-page statistical annex on Brent crude price elasticity.
But like all heavily funded international organisations, OPEC eventually became a victim of its own gravity. The nimble political instrument of 1973 morphed into a bureaucratic behemoth, laden with protocols, committees, and the kind of inertia that makes oil tankers look sprightly. The problem with over-relying on data is that it has a blind spot: human desperation. And when people are hurt for long enough, they start looking for ways out — no matter how many spreadsheets tell you they won’t.
The Curse of Easy Money
In the early days, OPEC leaders were careful. They understood that if prices hurt the consumer too much, the long-term game would be lost. But then came the curse that has ruined more kingdoms than foreign invasion ever has: easy money.
Oil revenues began to cover not just the basics of governance but the mounting inefficiencies and political compromises of daily life. Domestic problems could be sprayed with cash like weeds with pesticide. Public contentment could be bought, year after year, with subsidies, public-sector sinecures, and state-funded vanity projects.
It worked — until it didn’t.
The longer this system ran, the more dependent populations became on the handouts. Reform became politically suicidal. The idea of actually solving underlying structural problems was quietly retired in favour of throwing larger and larger bundles of petrodollars into the bonfire. But the bonfire never went out.
Suddenly, the “endless” stream of oil money started to look finite. And the leadership went to consult the Oracle.
The Oracle and the Addiction
The Oracle wasn’t a mystical figure in a desert cave. It was a cadre of specialists — economists, market analysts, and consultants who could read the tea leaves of global demand and tell leaders exactly what they wanted to hear. The goal was simple: find a way to justify higher prices without admitting you were mortgaging your future.
In the 1980s, $30 per barrel seemed extravagant. Today, that’s pocket change. The idea of “high” moved steadily upwards, the way a gambler’s definition of “big bet” changes over a long night at the table. And as the numbers rose, so did the dependency. OPEC’s great political weapon — price control — had become its Achilles heel.
Because here’s the rub: when your state budget depends almost entirely on high oil prices, low prices are no longer just bad for business. They are an existential threat. Too low for too long, and the whole apparatus — the subsidies, the patronage networks, the illusion of prosperity — begins to crumble.
The Unexpected Enemy
For decades, OPEC could rely on the assumption that demand would keep climbing in the industrialized world. North America, Europe, and Asia would need more and more oil. And then shale happened.
The rise of U.S. shale oil was not inevitable — it was the direct child of OPEC’s own high-price policy. Nobody would have sunk billions into developing a lower-yield, technically tricky resource without the assurance that prices would stay high enough to make the gamble worthwhile. In the early days, shale extraction costs were laughably high. It looked like a science project, not an industry. But entrepreneurs don’t see obstacles the way bureaucrats do. They see costs as something to be engineered down, chiselled away, made manageable until the profits appear.
The old oil order, built on massive national companies and long-term planning, was ripe for disruption.
The Homefield Advantage
The recent attacks on a Saudi oil facility — a reminder that even the world’s most guarded installations are vulnerable — have made one truth obvious: there’s a certain comfort in producing your own energy. Domestic production means jobs, investment, and shorter supply lines. It means you’re insulated from some of the market’s tantrums. It also means you don’t have to drill in the Arctic or in jungles where everything, including the drinking water, has to be flown in by helicopter.
Most importantly, it means you don’t have to negotiate with governments that might tear up contracts or decide you’re suddenly the villain of the week.
OPEC vs. NOPEC
Shale, unlike OPEC, is not a single beast. It’s a swarm — thousands of operators, big and small, each with their own survival strategies. This makes it impossible for OPEC to deal with them in the same way they deal with nation-states. You can’t threaten to embargo a hydra. Cut off one head and three more pop up, drilling in Texas or North Dakota.
OPEC — or “NOPEC,” as it’s sometimes derisively called when its dominance slips — finds itself in a strange kind of war. It’s fighting an enemy it doesn’t fully understand, an enemy with no single point of failure. Every strategy to regain control risks backfiring. Every attempt to starve shale producers out of the market forces OPEC members to slash their own prices, bleeding their own treasuries.
And so the mighty kennel’s meanest dog is now just another mutt, snapping at shadows. Member states, desperate for cash, start pawning their family silver — metaphorically and sometimes literally. And when that happens, the world will see the truth that was always there: the oil giants are no longer untouchable.
The war that began in October 1973 is still being fought. But for OPEC, it is the last war — and it is a war they cannot win.
