Tess Worley explains why oil has become so central to capitalism, and the imperialist scramble for control of the Middle East
The war on Iran and subsequent closure of the Strait of Hormuz has revealed a fundamental reality of contemporary capitalism—its addiction to oil.
As the conflict escalated, oil’s centrality to the global economic system was increasingly exposed. About one third of the world’s seaborne oil trade passes through this critical chokepoint and disruptions to shipping have led to surging transportation costs and increased the price of fuel, fertiliser, food and essential goods across the supply chain.
Some 90 per cent of Australia’s refined petroleum is imported, with the vast majority coming from South Korea, Singapore, Malaysia, Taiwan and Brunei.
In 2024, 84 per cent of crude oil that moved through the Strait of Hormuz went to the Asian market. South Korea, which accounts for more than 30 per cent of Australia’s oil imports, almost entirely relies on exports from the Middle East.
As one columnist wrote, “The Indian Ocean is the artery; Hormuz is the heart valve; the patient is the Indo-Pacific economy.” In other words, the strait is not only an oil checkpoint, but a valve of globalised production so that when it fails, the entire circulatory system is subject to collapse.
Most critically, about one third of the world’s fertiliser trade also passes through the strait, with the oil derivative sulphur a key component. This disruption to the world’s global agricultural supply chain, according to the UN, puts an estimated 45 million people at risk of acute starvation, with low-income regions to be hit the hardest.
The war has been a stark demonstration of oil’s centrality to the industries which enable capitalism to carry out its aim of accumulation, including transport, construction and agriculture.
But how and why has oil become so deeply woven into the fabric of capitalist infrastructure? And how is it critically wedded to colonialism and imperialism?
Why oil?
Oil’s centrality stems from its convenient properties—including that it can be transported and used everywhere. This makes it a powerful fuel for capitalism.
As academic Elmar Altvater noted, “There is a congruence of fossil energy’s physical properties with the socioeconomic and political logics of capitalist development.”
In his book, Crude Capitalism, Palestinian socialist Alex Hanieh argues that oil saturates and shapes all aspects of our society in three key ways: as fuel for electricity production, industry and heating; for petroleum-based transport; and petrochemicals.
First, oil’s role in enabling mass electrification had a powerful impact on capitalist profitability and the dynamics of consumption.
As households gained access to electricity, a range of new markets opened up for consumer goods such as dishwashers, televisions, washing machines, refrigerators, vacuum cleaners and electric cookers. In industry and manufacturing, the introduction of electrical machinery helped drive the growing automation of post-war European factories.
The second dimension, transport, was first revolutionised by use of petroleum during the First World War. Sir John Fisher, the commander-in-chief of the British Mediterranean fleet, had written to a journalist in 1901 that, “Oil fuel will absolutely revolutionise naval strategy. It’s a case of ‘WAKE UP ENGLAND’.”
In 1914, Winston Churchill, then First Lord of the Admiralty, recognised the immense military advantage of shifting naval fleets from coal to oil.
Oil-fired ships were lighter, faster and required less storage, meaning they could carry more weapons and crew.
Ten days after the European armistice of 11 November 1918, Lord Curzon presided over a celebratory gathering of the Inter-Allied Petroleum conference, saying “We might say the allies floated to victory on a wave of oil.”
Finally, the rise of petrochemicals provided, as Hanieh argues, “feedstock—the raw material of commodity production itself”. This development can’t be overstated as it meant oil would become central to other industries.
Take food production, which was revolutionised by chemical fertilisers, pesticides, defoliants and herbicides, new synthetic products all ultimately derived from oil.
From the 1950s, a wide array of naturally derived substances were displaced by plastics, synthetic fibres, detergents and other petroleum-based chemicals. Today, while up to 85 per cent of crude oil is refined into fuel, the remaining portion acts as the raw material for more than 6000 everyday products. It’s in everything from synthetic fabrics to toothbrushes, makeup and food additives.
Over the past four decades, China has become the world’s manufacturing hub, and today is the world’s largest importer of crude oil. Much of that oil comes from the Middle East. This makes access to stable oil supplies a major strategic priority for the Chinese state.
Oil, empire and global conflict
As oil became integral to capitalism, countries fought to control oil reserves, pipelines and shipping lanes. Control of oil was a principal factor in the post-First World War carve up of the Middle East. It was keenly recognised that substantial reserves existed across Iran and the former Ottoman territories.
Churchill said Britain’s oil policy was to become, “The owners, or at any rate the controllers at the source, of at least a proportion of the supply of natural oil which we require … and to draw our oil supply, so far as possible, from sources under British control or British influence.”
In 1918, a report by Admiral Sir Edmond Slade argued that, “In Persia and Mesopotamia lie the largest undeveloped resources at present known to the world … if this estimate is anywhere near the truth, then it is evident that the power that controls the oil lands of Persia and Mesopotamia will control the source of supply of the majority of the liquid fuel in the future.
“These advantages are very great and we cannot expect to enjoy them without making some sacrifices for them and we must be prepared to defend our claim against everybody.”
As the US emerged as a superpower following 1945 the State Department described Middle East oil as, “A stupendous source of strategic power and one of the greatest material prizes in world history.”
And the US set out to ensure it had control—using brutal violence whenever necessary.
US efforts to dominate the Middle East have produced a string of invasions and interventions, including the coup in Iran in 1953 against Mohammad Mossadegh, who sought to nationalise Iran’s oil industry which had previously been dominated by the British-owned Anglo-Iranian Oil company.
The US war on Iraq in 1991 was fought partly to show the US’s willingness to guarantee Saudi Arabia’s security.
Iraq’s President Saddam Hussein had invaded Kuwait and fired missiles at Saudi Arabia.
According to US state department official Robert Kimmett, the broader aim was to ensure the “free, uninterrupted flow of oil from the Gulf”. He added, “If Kuwait grew carrots, we wouldn’t give a damn.”
Before the 1970s, a handful of US and European companies known as the “Seven Sisters” controlled 85 per cent of world oil production. They worked together to exploit the oil fields of Iran, Iraq and Saudi Arabia. The seven companies later merged into four: BP (British Petroleum), Royal Dutch Shell, Exxonmobil and Chevron.
Their dominance in the Middle East ended when the oil-producing countries established the OPEC consortium and took control of oil for themselves in 1973.
Today, state-owned oil companies are some of the world’s biggest producers. Saudi Aramco’s profits alone surpass those of the five largest Western oil companies combined—in 2022, it made $US200 billion, the largest corporate profit ever.
Leverage over China
Today, the rise of China and relative erosion of American power is reflected in the Middle East’s importance to US imperialism.
The US is the world’s largest producer of oil but is still concerned to control the flow of oil from the Middle East because it gives it leverage over China—as well as allies like Japan—who are dependent on Middle East oil. Control means it can guarantee oil supplies to its allies and potentially cut them off to adversaries in the event of war.
Australia is one of those US allies that relies on oil from the Middle East.
That’s one reason Australia joined the US in wars in Iraq and Afghanistan and why Anthony Albanese was one of the first world leaders to support the US-Israeli attack on Iran. In the name of “defence”, Australia sent an E7-A Wedgetail aircraft and advanced medium range air-to-air missiles to its closest Gulf partner, the UAE. Data from the Wedgetail spy plane was almost certainly used to target UAE strikes on Iran.
To come back to the wider geopolitics of the region, Hanieh argues that the US had two major pillars of influence and power in the Middle East.
One was Saudi Arabia and the Gulf monarchies, and the second was Israel, particularly after the 1967 war. And what the US has tried to do over the last couple of decades is bring these two pillars together: to normalise relationships between the Gulf and Israel under American hegemony.
This dynamic helps account for the United States’ ongoing support for Israel, which is its most reliable ally in the region, with the power to punish states that step out of line.
Ultimately, the war on Iran and the genocide in Gaza are both symptoms of a system that prioritises profit and extraction, driven by competition. The Middle East is a critical prize for Western imperialist powers and their goal to control oil and its associated products.
Capitalism and oil are fundamentally linked. Fossil fuels cannot be peeled away from capitalism and leave the system intact; they are embedded in every aspect of it.
We cannot extricate ourselves from oil’s pervasiveness—certainly not at the pace necessary to halt runaway climate change—while remaining within capitalism.
