A barrel of oil may weigh 159 liters, but in global geopolitics, its weight is measured in the influence that changes the destinies of entire nations. The price of black gold turns into a powerful economic trigger capable of triggering crises, contributing to upswings, or becoming a tool in the great game of geopolitics. The regularity of oil markets is inexorable: every jump in prices or their fall finds an echo in political strategic decisions, global alliances and even military conflicts.
Against this background, Donald Trump’s call to Saudi Arabia to lower oil prices looks like an attempt to use energy leverage to resolve one of the most acute conflicts of our time — the war in Ukraine. Trump actually pointed to a direct link between oil prices and Russia’s ability to continue the war. As before, the energy dilemma remains a central topic in international relations. Let’s try to consider why the price of a barrel of oil is now again in the center of attention of the world community and recall the most vivid historical examples of the connection between oil, global conflicts and wars that changed the course of world history.
Trump’s statement
During his speech at the economic forum in Davos, US President Donald Trump unexpectedly addressed Saudi Arabia with an appeal that could turn the geopolitical game. Trump directly stated that lower oil prices could be the key to ending the war in Ukraine and saving millions of lives.
“I want to ask Saudi Arabia to reduce oil prices. If the price went down, Russia’s war in Ukraine would quickly end. But as long as prices remain high, this war will continue. You can end this war by lowering oil prices. This should have been done a long time ago. Millions of lives have been lost in this war.” – emphasized Trump, addressing his words directly to the Saudi leadership.
This statement of the US president attracted the attention of international leaders and the world community, because in it Trump actually connected the energy policy of Saudi Arabia with the fate of the war in Ukraine. Such a step looks like an energy ultimatum against the background of global economic and geopolitical challenges.
In addition, Trump emphasized that his administration has declared an energy emergency to deal with global problems and called for lower interest rates around the world. In his opinion, this will become a powerful stimulus for the world economy.
“We’re lowering interest rates, and you should lower them.” – said Trump, without hiding his desire for radical economic changes.
Against the background of global economic challenges, sanctions policy against Russia and the search for ways to weaken its military machine, Trump’s words sounded like an energy manifesto. He highlighted the important but often hidden role of energy in geopolitics, where the price of oil can decide the fate of conflicts and change the course of history. Saudi Arabia, one of the largest oil exporters, holds the levers that can change the economic balance of power in the world. A drop in oil prices, according to Trump, could undermine the Kremlin’s main financial resource, forcing it to change its policy towards Ukraine.
At the same time, this statement by the US president is a reflection of something bigger – awareness of the role of energy resources in modern conflicts and an attempt to use them as a means to achieve global stability.
Oil prices as a detonator of the economy
Oil has always been more than just a resource. Its price, availability and supply control determined the history of entire decades, caused economic ups and downs, changed the destinies of countries and peoples. The history of the oil crises of the second half of the 20th century is a chronicle of global changes that affected politics, economics, and international relations.
The first major energy crisis began in the fall of 1973, when OPEC countries decided to cut oil production by about 5%. Then the OPEC countries, which included all Arab member states, as well as Egypt and Syria, announced that they would stop supplying oil to countries that supported Israel in the conflict with Syria and Egypt. This decision had not only an economic basis, but also a political subtext. The so-called “oil embargo” was directed against the states that supported Israel in the conflict with the Arab countries. As early as October 16, 1973, oil prices rose by 70% — from $3 to $5 per barrel, and reached $12 within a year. For Western Europe and the United States, this resulted in recession, inflation, and rising unemployment. Instead, oil-producing countries such as Saudi Arabia, Iraq, and Venezuela have enjoyed huge profits that have allowed them to invest heavily in infrastructure and economic development. At the same time, these countries’ dependence on oil has made their economies vulnerable to any future price fluctuations.
The result of the embargo was a significant aggravation of international relations. Many African states severed diplomatic ties with Israel, and Western European countries were forced to adapt to the demands of Arab countries. The crisis also affected the USSR: high oil prices opened opportunities for exporting energy resources to the West, which eventually laid the foundation for the dependence of the Soviet Union, and later Russia, on revenues from petrodollars.
The second energy crisis came in 1979, after the Islamic Revolution in Iran. The loss of a significant amount of Iranian oil on the market and the start of the Iran-Iraq war caused a sharp rise in prices — from $13 to almost $37 per barrel. Western countries once again faced economic difficulties, and the demand for alternative energy sources increased significantly. Iran and Iraq, involved in a long conflict, could not fully take advantage of the high prices, and for other oil-producing countries it became an opportunity to strengthen their economies.
However, in 1985, Saudi Arabia dramatically increased oil production, causing prices to drop from $32 to $10 per barrel. This decision had serious consequences for the USSR, which was heavily dependent on oil exports. In the 1970s and early 1980s, high oil prices provided a source of foreign currency that helped finance numerous social programs, support military spending, and stabilize the economy. The Soviet Union actively exported oil to Europe, using these revenues to import Western technology and equipment. However, oil dependence turned into a tragedy in the late 1980s. The sharp drop in oil prices after 1985 from over $30 to $10 per barrel due to increased production in North America and the entry of Saudi oil into the market significantly reduced the foreign currency inflows to the USSR budget. This coincided with internal economic problems and political instability. As a result, the economy of the Union began to degrade, which became one of the factors of its collapse in 1991.
One of the key moments was the 1990-1991 crisis caused by Iraq’s invasion of Kuwait. Iraqi leader Saddam Hussein accused Kuwait and the United Arab Emirates of overproducing oil, causing oil prices to drop to $7 a barrel — well below OPEC’s target of $18. Iraq also claimed $2.4 billion worth of oil was stolen from its Rumaila basin. After the failure of negotiations, on August 20, 1990, Kuwait was occupied by Iraqi troops. Iraqis set fire to hundreds of oil wells, damaging the country’s key oil infrastructure. However, the US-led Operation Desert Storm liberated Kuwait as early as February 1991 without causing the feared global energy crisis.
The next serious blow to the oil market occurred in 2000, when OPEC canceled the price corridor for oil, which had previously kept it in the range of $22-28 per barrel. Prices reached $35, provoking “petrol riots” in Europe that swept through Germany, Great Britain, France and Belgium. The main problems then were connected not so much with the shortage of oil, but with logistics: the shortage of tankers and difficulties with transportation aggravated the crisis.
In 2004-2005, oil prices continued to rise, reaching $53 per barrel. Strikes in Venezuela, which halted gasoline production, and Hurricane Katrina, which paralyzed production in the Gulf of Mexico, caused prices to peak at $71 a barrel. The world began to realize the vulnerability of the energy system to natural disasters and political instability.
The culmination of the oil chaos was 2007-2008, when the price per barrel reached a record $147. Rising prices caused gasoline and commodity prices to rise in the US, which became a catalyst for the financial crisis. The banking system, overburdened with debt, could not withstand the strain, leading to a global recession. Demand for oil fell and prices collapsed to $35-75 per barrel, causing huge losses for exporting countries.
Modern countries dependent on oil exports are trying to diversify their economies in order to avoid the trap that the USSR fell into. For example, Saudi Arabia is implementing the Vision 2030 program aimed at reducing dependence on oil. Russia, by contrast, continues to be largely dependent on energy exports, making it vulnerable to sanctions and falling oil prices. At the same time, importing countries such as Japan and Germany have adapted their economies by investing in renewable energy sources and reducing oil consumption. This allows them to be less dependent on global price dynamics and geopolitical risks.
The oil market has remained volatile in recent years. In 2014, Brent crude oil prices reached $115 per barrel, but then fell sharply due to the slowdown in the global economy and the development of shale oil production in the United States. This undermined the position of traditional exporters and showed how new technologies can change the balance in the market.
Thus, the oil crises of the 20th and 21st centuries show that economics and geopolitics remain inextricably linked to the prices of “black gold”. The dependence of exporting countries on oil often becomes their weakness, making them vulnerable to price fluctuations and political decisions. At the same time, importing countries are looking for alternatives, actively investing in renewable energy, which is gradually reducing the impact of oil on the world economy. The lessons of the past remain important to understanding how to manage resources effectively in a world where sustainability is only a relative concept.
It should be noted that in the 21st century, oil remains a central factor in the Kremlin’s economy and politics. After the start of a full-scale war against Ukraine, oil sales allowed Russia to maintain financial stability, even in the face of tough international sanctions and attempts by Western countries to limit its access to world markets. However, this stability proved temporary, as Russia’s reliance on oil and gas exports left it vulnerable to falling energy prices and shrinking trade with key partners. The growing pressure on the Russian economy in the form of an oil embargo and price restrictions imposed by the EU and the G7 countries has reduced the Kremlin’s revenues, making it difficult to finance military operations.
How Oil Shapes Wars: Sanctions, Resources, and the Struggle for Influence
Oil has long ceased to be only an energy resource, it has become a strategic factor capable of determining the fate of entire states and continents. Almost all major wars of recent decades have involved oil in one way or another: its production, supply, or control of key transportation routes. Even the Cold War was made possible only by the oil revenues of the Soviet Union, which ensured its long existence. The wealthiest countries in the world are either those that have succeeded through innovation or those that have significant oil resources.
Sanctions, which are used as a tool to influence aggressive regimes, are also based on attempts to limit access to this “black gold”. However, history shows that sanctions work only when they are part of a comprehensive strategy, backed by the unity of the international community and the determination of buyers.
For the first time, the sanctions tool was used back in 1935, when the League of Nations tried to stop Italian aggression against Ethiopia. But the sanctions turned out to be weak: the list of goods included in the embargo was mostly symbolic, and oil was not included in the list. The result was the annexation of Ethiopia, the rise of fascism and further destabilization of the region. The lesson was clear – without control over strategic resources such as oil, sanctions become a diplomatic formality.
The second instance of oil sanctions occurred in 1941, when the United States, Great Britain, and the Netherlands imposed an embargo against Japan. The shortage of oil prompted the Japanese leadership to take radical actions, including the attack on Pearl Harbor. At the same time, the allies of the anti-Hitler coalition created a committee for the purchase and distribution of oil, which ensured a stable supply of energy resources for military needs. This decision became one of the prerequisites for victory in the Second World War.
A similar situation occurred in 1951, when Great Britain introduced sanctions against Iran due to the nationalization of its oil assets. Iran lost access to export revenues, but the vacuum in the market was quickly filled by American companies that doubled production and consolidated their positions. The effectiveness of sanctions then depended on coordination among importing countries that could redistribute energy flows, and this became an important lesson for future economic confrontations.
In 1951, sanctions were imposed on Iran when the government of Mohammed Mosaddiq nationalized oil assets, including British Petroleum. Great Britain imposed an embargo on Iranian oil and prohibited the use of tankers for its transportation. This led to a sharp drop in Iran’s revenues, a break in diplomatic relations with Great Britain, and an economic crisis in the country. At the same time, American companies took advantage of the situation by increasing their own production. In 1954, as a result of a coup in Iran, a consortium of Western oil companies was created, which gained access to Iranian fields for 25 years.
The next crisis unfolded in 1956, when Egypt nationalized the Suez Canal in response to US and British sanctions. Egypt blocked passage through the canal, sinking ships, which led to the cessation of transportation of 60% of Arab oil. At that time, the communist bloc actively supported Egypt, and the Arab countries announced an embargo on the supply of oil to Europe and the United States. This caused a shortage of energy carriers, which was partially compensated by supplies from the United States.
Russia’s modern war against Ukraine is another example of how oil and gas have become one of the central factors in the continuation of the conflict. After the start of the war, the sale of energy resources allowed the Kremlin to maintain financial stability and finance the war, even in the face of international sanctions. Russia remained dependent on oil and gas exports, and its main customers, such as the EU, were forced to look for new suppliers and implement energy-saving technologies.
However, the sanctions against Russian oil, introduced by the G7 countries, became a powerful blow to its economy. Restrictions on oil prices, a ban on its transportation and a decrease in imports from Europe forced Russia to look for alternative sales markets, such as China and India, but at significant discounts. This gradually reduces the Kremlin’s income, making it difficult to finance military operations.
The experience of oil sanctions and wars allows us to draw three key conclusions. The first is that the world community’s insufficient response to tyranny and crimes against humanity only contributes to new tragedies. The second is that the power of buyers may exceed the effectiveness of the embargo imposed by oil producers. The third is that the current confrontation over oil, in which China, Iran and Russia are actively involved, can be resolved by creating an organization for the joint purchase of oil for the G7 countries.
Speaking at the economic forum in Davos, Donald Trump meant that high oil prices contribute to the financial stability of Russia, which is one of the largest energy exporters in the world. Oil and gas are the main sources of foreign exchange earnings for the Russian economy, and their exports allow the government to finance the war, even in the face of international sanctions. When oil prices are high, Russia receives more profits from its sales, which softens the impact of economic sanctions and provides resources for continued hostilities. Lower oil prices could limit Russia’s financial options and force the Kremlin to seek compromises or even end the war.
Trump, like many politicians, considers the economic aspect of conflicts, since the resources obtained from the sale of oil are closely related to the state’s ability to finance military operations. His statement emphasizes that global energy policy and energy markets play an important role in determining the duration and intensity of conflict.
Oil will remain an important factor in international relations for a long time, but its role is gradually changing. Abandoning oil as the main energy resource can reduce the number of conflicts associated with the struggle for control over oil resources. As history shows, wars for oil make sense, but wars for wind or solar do not. The transition to renewable energy sources that are more accessible and decentralized (for example, solar, wind energy) can reduce the dependence of states on strategic resources and eliminate the basis for many geopolitical conflicts. However, it is important to consider that the abandonment of oil is a complex and long-term process that requires global cooperation, investment in energy transformation and the creation of new technologies. In addition, resources needed for renewable energy (such as rare earth metals) may also become the subject of new conflicts if their extraction and distribution are not regulated.
While divesting from oil is an important step towards a peaceful future, how the world manages this transition and whether it can avoid new forms of dependence and confrontation will be crucial. And this is the key to a more stable and peaceful future, because those who do not learn the lessons of the past risk repeating the same mistakes.
Oksana Ishchenko
