Adam Hanieh, who works on oil and capitalism, energy transitions, and the political economy of the Middle East, is Professor of Political Economy and Global Development at the University of Exeter (United Kingdom), and Joint Chair in Middle East Studies at the Institute of International and Area Studies at Tsinghua University (China). He is the author of Money, Markets, and Monarchies: The Gulf Cooperation Council and the Political Economy of the Contemporary Middle East. In an interview with Diwan conducted via email in July and August, Hanieh discussed his most recent book, Crude Capitalism: Oil, Corporate Power, and the Making of the World Market, to update our thinking on the distribution of resources and power in today’s global energy markets.
Yezid Sayigh: In your new book, you argue that the Western super-companies famously known as the “Seven Sisters” dominated global oil markets thanks to their “vertically integrated corporate structures,” but that the emergence of the Soviet Union as a major producer enabled other producer countries to acquire autonomy and modify the terms of their deals with the Seven Sisters from the mid-20th century onward. You also argue that Western companies still seek control by maintaining their vertically integrated structures, but that the world oil industry is now fractured into “interdependent regional blocs centred around different corporate structures.” How do you fit these two trends together?
Adam Hanieh: Vertical integration has been a key source of corporate power in the global oil industry, stretching all the way back to the early days of Standard Oil in the United States. Dominating every step along the oil value chain—extraction, refining, the production of petrochemicals, transport, and marketing—allowed the big companies to exclude competitors from vital infrastructure, control prices, and shift activities depending on market conditions. This was the secret to the Seven Sisters’ control of world oil through much of the 20th century.
But this control was repeatedly destabilized and disrupted by a range of contingent developments. An important example of this was the rise of the Soviet Union as a major oil producer after the 1917 Revolution. The Soviet Union was the first country in history to fully nationalize its oil, and oil exports were essential to earning hard currency. Yet one of the unintended consequences of the Soviet oil trade was the space it opened up for other countries to break the stranglehold of the Seven Sisters. Indeed, many of Europe’s most prominent energy companies today—such as Italy’s Eni and Spain’s Repsol—find their roots in this trade with the Soviet Union.
Similarly, the formation of the Organization of the Petroleum Exporting Countries (OPEC) and the oil nationalizations of the 1960s and 1970s disrupted Western domination of the industry. As producer states gradually took control of their reserves, the creation and expansion of National Oil Companies (NOCs) shifted the balance of power in the industry. At first, many of these NOCs were limited to upstream extraction, selling crude into global markets dominated by Western majors. But over time, they have adopted the same vertically integrated strategies of the Seven Sisters. Saudi Aramco, for instance, is now the biggest oil company in the world, and is active across the entire value chain.
This has fractured the oil industry into a set of interdependent regional blocs. Western supermajors continue to dominate within North America and Europe, where their vertically integrated structures remain intact and profitable. But the Gulf states, led by Saudi Aramco, have become the anchor of what I describe as the “East-East hydrocarbon axis”: the increasingly dense flows of crude oil, refined products, and petrochemicals between the Gulf and East Asia. This is not only about crude oil exports. Gulf NOCs now have massive joint ventures in both refining and petrochemicals in China, South Korea, and Japan, while East Asian firms are deeply invested in Gulf energy infrastructure. Vertical integration is really the key to understanding these new interdependencies between the Gulf and East Asia, which rival, and in some areas surpass, the old Western-centered oil industry in their reach and impact on the market.
YS: You remind us that the United States’ so-called “Eisenhower Doctrine” of 1957 spoke of protecting both oil production and transport, and link this with the momentous events of that decade in the Middle East and North Africa (MENA): the emergence of the nonaligned movement in Bandung, Egypt’s nationalization of the Suez Canal, the overthrow of the Iraqi monarchy, and nationalist challenges to pro-Western regimes in Jordan and Lebanon. Should we view the plethora of new infrastructure-based “belt roads” and “corridors” from the same perspective?
AH: These new infrastructure corridors highlight the fact that economic power is not just about the production of commodities, but also about controlling how those commodities are transported, distributed, and sold. They involve material components—such as pipelines, liquefied natural gas terminals, and ports—as well as legal, financial, and institutional practices. Precisely because infrastructure is a source of power, controlling it has always been interlaced with militarism and colonialism—as well as struggles for sovereignty and independence. This was true in the 1950s, when the Eisenhower Doctrine explicitly tied U.S. security commitments to protecting both oil production and transport routes, and it remains true today. It is not accidental that one of the first acts of President Donald Trump’s administration was to reassert the American presence in Panama and U.S. control of the Panama Canal.
These infrastructure spaces serve to reorder geopolitical space and have now very clearly become a focus of rival regional projects. We can see this, for instance, in the ongoing discussions around the India-Middle East-Europe Economic Corridor (IMEC), which is planned to link India, the Gulf, Israel, and Europe, and has been portrayed by U.S. foreign policymakers as a counterpoint to China’s Belt and Road Initiative (BRI).
I think one thing that is often overlooked is that initiatives such as IMEC and the BRI are profoundly linked to the trajectories of the climate crisis. What is being locked in through these new schemes is not just trade, but expanding fossil fuel consumption. The East-East hydrocarbon axis I spoke about earlier is the fastest-growing energy corridor in the world, and the infrastructure being built today ensures that these flows will grow well into the mid-21st century—precisely when global emissions must be in the process of falling sharply if we are to avoid catastrophic warming. In this sense, such projects hardwire fossil fuels into the world economy at the very moment it needs to be decarbonized.
YS: The United States is now the world’s largest producer of oil. But your book argues strongly that dominance is achieved through multiple domains, including transport, refining, and the manufacture of feedstocks and other petrochemicals. How do you see the U.S. position in this wider landscape, and what are the implications for MENA producers?
AH: It’s true that the United States is now the world’s largest producer of oil, but production volumes alone don’t tell us how power is exercised in the global energy system. My book argues that dominance rests on control across the entire value chain: transport, refining, petrochemicals, marketing, and finance. And it’s here that the picture has shifted most dramatically over the past two decades, because NOCs in the Middle East and beyond are no longer confined to upstream extraction.
As I noted earlier, companies such as Saudi Aramco and the Abu Dhabi National Oil Company have become vertically integrated across the oil value chain. They run some of the largest refining complexes in the world and have become major players in petrochemicals—plastics, fertilizers, and synthetic materials—which will be the biggest source of oil demand growth over the coming decades. Aramco, for instance, is now the second largest global producer of synthetic rubber, as well as a leading producer of ethylene and propylene—two key petrochemical products.
The United States, however, retains key advantages. Its refining and petrochemical sector is still among the most technologically advanced, and its energy firms dominate oilfield services, transport, and global marketing networks. Crucially, U.S. financial and military power remains deeply entangled with the oil economy: oil is priced in U.S. dollars, Gulf financial surpluses are still largely recycled into U.S. assets, and Washington continues to offer military protection and political support to the Gulf’s monarchies. So even as Gulf states and their NOCs expand downstream and build new ties with China, they remain embedded in an international system where American power remains dominant, albeit under increasing challenge.
YS: You describe the deep and mutual embedding of Chinese and Gulf capital in each other’s economies and trade. This is a fundamental transformation, but is it limited by the fact that China cannot so far offer the Gulf what the United States has offered since the 1970s: massive arms sales and strategic protection?
AH: The scale of Chinese-Gulf economic interdependence today is unprecedented. China is now the largest importer of Gulf hydrocarbons, while Gulf NOCs have invested deeply in Chinese refining, petrochemicals, and oil logistics. Beyond the oil sector, China is also leading investments in renewable energy, Artificial Intelligence, and telecommunications in the Gulf. China also sees the Gulf as the regional headquarters of the BRI; by some estimates, 60 percent of all of China’s exports to Europe and Africa passes through the United Arab Emirates.
But yes, you are right—China cannot offer the Gulf monarchies the same strategic protection as the United States. Here I think it’s important to recognize that the U.S.-Gulf relationship was never simply about securing flows of crude oil. From the 1970s onward, the recirculation of Gulf financial surpluses into U.S. markets has been a critical part of the global financial architecture—whether through Gulf purchases of Treasury bonds, or investments in U.S. equities. And these connections are actually deepening, not weakening. The Gulf’s investments in U.S. stock markets, for instance, have nearly tripled since 2017, and now account for around 5 percent of all foreign investments in American companies.
Continuing historical patterns, the export of Western military hardware to the Gulf has also skyrocketed over the past decade. More than one-fifth of world arms exports went to the Gulf between 2020 and 2024, surpassing any other region worldwide. These included aircraft, ships, and missiles, with an overwhelming majority supplied by the United States (Italy and France were the next most prolific suppliers). About one-quarter of U.S. arms exports went to Saudi Arabia alone during 2016–20, and Riyadh remained the largest single recipient of U.S. arms in 2020–2024. Through these purchases, the Gulf monarchies provide a key revenue stream for American military firms while simultaneously reinforcing the broader strategic ties between themselves and the United States—something China cannot replicate.
YS: Oil has come a long way since Saudi oil minister Abdullah Tariki, known as the Red Sheikh, co-authored the Maadi Agreement of 1959, which led to the creation of OPEC. You note, for example, that three of the top four refiners in the world today are either East Asian or Saudi. But, given the leverage the United States still enjoys thanks to the status of the dollar as the main currency of international energy trade, how secure are the national oil companies of producer countries?
AH: Despite periodic talk of a “petroyuan,” the dollar still dominates energy trade and global payments, with most cross‑border commerce invoiced and settled in that currency. The dollar also remains the primary international reserve asset, which preserves Washington’s structural power over oil flows and revenues. Most importantly, its primacy gives the United States huge leverage over other countries through the threat of sanctions or exclusion from the U.S. banking system.
The Gulf states have a major stake in this American-centered system. Most of their assets are denominated in dollars and continue to flow into U.S. markets. The United States remains the key focus of Gulf sovereign wealth fund (SWF) investments by a substantial margin. For instance, one of the world’s biggest SWFs, the Abu Dhabi Investment Authority, holds over half of its portfolio in U.S. assets. So I think that while the Gulf states are diversifying their international trade, they remain primarily anchored to the United States at the financial and military levels.
