The keyboard on your desk,
the soles of the sneakers you’re wearing,
the cap of the water bottle you just drank from.
If you take a look around your room, it’s actually harder to find items that aren’t derived from oil.
Yet, we still remember oil merely as ‘fuel for our cars.’
It is surprisingly rarely discussed that for the past 150 years, this single black, sticky liquid has drawn borders, underpinned monetary systems, and toppled dynasties. This article retraces the flow of those 150 years.
From the moment a businessman built an empire not by owning oil fields but by seizing the pipelines, to the present day, as that empire fades and a new war over cobalt and semiconductors begins.
Why did Rockefeller target pipelines instead of oil fields?
John D. Rockefeller’s method for building his oil empire was not to acquire oil fields, but to seize control of the flow.
He had no interest in extracting the oil. Instead, he realized early on that the person who controls the ‘vessels’—refining, transporting, and selling—possesses everything.
In 1872, Rockefeller’s Standard Oil secretly partnered with railroad companies to secure transport costs far lower than those of his competitors.
Refineries that couldn’t withstand the price gap had no choice but to sell their companies or shut down. During a six-week period known as the ‘Cleveland Massacre,’ 22 out of 26 competitors were absorbed by Standard Oil. Among the small-scale refiners who went out of business in the aftermath was the father of 14-year-old Ida Tarbell.
Years later, that girl became America’s greatest investigative journalist. Starting in 1902, Tarbell spent two years exposing the inner workings of Standard Oil in a 19-part series for McClure’s Magazine, which shook American society to its core.
In 1911, the Supreme Court ordered the forced breakup of Standard Oil into 34 companies. Today’s ExxonMobil and Chevron are companies that survived by simply changing their names after the split.
How did the Red Line Agreement dictate Middle Eastern borders?
The answer to the Red Line Agreement lies in a single map.
In 1928, British, French, and American oil companies drew a red line around the territory of the former Ottoman Empire and declared, “Within these borders, no one can develop oil alone without the consent of all of us.”
The man who brokered this deal was Calouste Gulbenkian, an Armenian businessman. Though he belonged to no single nation, he understood the interests of all the great powers; in return, he received 5% of the oil profits from the agreement area, earning him the nickname ‘Mr. Five Percent.’
The problem is that this red line was drawn regardless of ethnicity or religion. A significant portion of the border conflicts in the Middle East that persist to this day were conceived at this negotiation table.
The perception of oil as a strategic asset solidified slightly earlier than this.
It happened when Winston Churchill, then First Lord of the Admiralty, took the gamble of switching the Royal Navy’s fleet fuel from coal to oil just before World War I.
Britain entered the war with the weakness of not having a single drop of oil of its own, and after the war, the saying “The Allied cause floated to victory on a wave of oil,” attributed to then-Foreign Secretary Lord Curzon, became widely known. In World War II, the side that secured more oil won. Oil had now become a resource that determined the fate of nations.
Was the petrodollar really born from a secret agreement to ’trade only in dollars’?
Contrary to what many popular books claim, the document actually signed between the U.S. and Saudi Arabia in 1974 contains no clause stating ‘oil must be traded only in dollars.’ Saudi Arabia continued to accept pound sterling payments for some time after this document.
The background is as follows. After the ‘Nixon Shock’ on August 15, 1971, when President Nixon severed the link between the dollar and gold, confidence in the dollar wavered.
When the price of oil quadrupled during the 1973 oil shock, oil-producing countries amassed huge amounts of dollars, and the U.S. needed a way to pull that money back into the American economy. That led to the ‘U.S.-Saudi Joint Commission on Economic Cooperation’ agreement signed on June 8, 1974.
Separate from this agreement, which did not address currency issues, a secret deal was made later that year through Secretary of State Kissinger’s line: Saudi oil money would be invested in U.S. Treasury bonds in exchange for military support. This agreement was revealed only in 2016 after Bloomberg filed a request for information with the U.S. National Archives. The entire Organization of Petroleum Exporting Countries (OPEC) never signed this clause.
In other words, rather than a forced clause saying ’trade only in dollars,’ it is closer to the truth that the dollar-oil link was established as the structure of exchanging security for Treasury bond purchases gradually solidified. Still, I believe the narrative of ‘Kissinger’s secret deal’ has been reproduced for nearly half a century for a specific reason. It is much easier to understand a dramatic deal made by one person’s decision than a structure built by scattered negotiations without a single official treaty. The desire to compress complex processes into a single scene effectively willed a non-existent treaty into existence.
Regardless of whether the clause existed, the result was clear. Oil money from producing nations flowed into the U.S. Treasury bond market, and the dollar was effectively tied to oil rather than gold. How this structure has supported American hegemony, and why that axis is currently shaking, was covered in more detail in the section on the Triffin Dilemma.
Why did the oil shock topple the Pahlavi dynasty?
The 1973 oil shock, in which Arab oil-producing countries pressured the West using oil as a weapon, quadrupled oil prices, and this shock brought the global economy to a standstill. One of the countries that suddenly found itself with massive oil money was Iran.
At the time, the Shah of Iran was a key U.S. ally. He bought state-of-the-art weapons with overflowing petrodollars and styled himself the ‘policeman of the Middle East,’ while the capital, Tehran, transformed into a city of luxury and hedonism.
However, behind the flashy consumption, public anger and resistance from religious leaders were building up. The oil money was fueling cracks in society rather than integrating it.
Ultimately, the Pahlavi dynasty collapsed in the 1979 Islamic Revolution, and with the seizure of the U.S. Embassy in Tehran, the U.S. lost its key Middle Eastern ally. The wealth created by oil turned back into a weapon that shook the throne in an instant.
How did the shale revolution and climate warnings shake the oil era?
In the 21st century, the variables that shook the foundation of oil hegemony appeared simultaneously underground and in the sky.
The underground variable was a stubborn oilman named George Mitchell. Despite being mocked as a “madman,” he poured hundreds of millions of dollars over nearly 20 years to extract oil and gas from sedimentary (shale) layers that everyone else had given up on, ultimately succeeding in commercializing the method of fracturing rock with water pressure to extract resources.
Thanks to this ‘shale revolution,’ the U.S. surpassed Saudi Arabia and Russia to become the world’s largest oil producer, and as its dependence on Middle Eastern oil decreased, it began to slowly step back from its role as the ‘world’s policeman.’
The variable in the sky was more fundamental. In 1988, NASA scientist James Hansen asserted in a U.S. congressional hearing, “Global warming has begun.” This warning, which was ignored for decades, later manifested as the reality of droughts, floods, and melting glaciers.
The 2015 Paris Agreement was a turning point where humanity officially agreed to ‘post-oil’ for the first time.
As electric vehicles and renewable energy began to rapidly replace the place of oil, the oil era faced its most fundamental threat at its most glorious moment.
After oil, where is the new resource war taking place?
As the axis of oil shifted, a vacuum was created in the entire order that stood upon it.
What the industry calls ‘Zero Barrel,’ the threshold of a civilization running without oil, has become a realistic topic for the first time.
Saudi Crown Prince Mohammed bin Salman is preparing for this post-oil era, and Russia and China are attempting to settle oil payments in yuan, aiming at the heart of the petrodollar system.
U.S. strategic interest is also shifting from the Middle East to the Indo-Pacific to keep China in check. That does not mean geopolitical tension over energy has disappeared. The structure where a significant portion of global seaborne crude oil traffic depends on the Strait of Hormuz remains unchanged. Even the U.S., which has become the world’s number one oil producer due to the shale revolution, is experiencing the paradox of not being able to freely use its own oil due to domestic transport regulations.
The battlefields themselves are also shifting. If the wars of the 20th century were fought over Middle Eastern oil fields, the battlefields of the 21st century are the lithium triangle in South America, TSMC’s factories in Taiwan—which produce 90% of the world’s most advanced semiconductors—and the deep-sea data cables connecting the global internet. It is a fight to conquer the invisible territory of ’technical standards’ instead of occupying land with tanks.
Supplying the physical ‘blood’ behind the scenes are critical minerals known as ‘white oil.’ This is especially true for cobalt, which is essential for electric vehicle batteries. The Democratic Republic of the Congo accounts for over 70% of global cobalt mining, and recent estimates put it even higher, between 72 and 84%.
While engineers in California design batteries, children in the Congo mine cobalt with their bare hands in dirt pits to earn $1 a day. The picture changes again when you move from the mining stage to the refining stage. According to a 2025 Cobalt Institute report, China holds about 79% of the cobalt refining market.
| Stage | Country/Company | Market Share (as of 2025) |
|---|---|---|
| Mining | Democratic Republic of the Congo | Approx. 72~84% |
| Refining | China | Approx. 79% |
Table: The dominance of mining and refining in the global cobalt supply chain lies with different countries.
The fact that the countries that mine and the countries that process are different is the reason why the U.S. and the West have belatedly jumped in, calling for ‘supply chain restructuring.’ Whoever holds the brain of ’technical standards’ and the heart of ‘critical minerals’ determines the direction of the next hegemony.
Oil, at the end of the black myth
The end of the oil era is not a quiet retirement. The war to seize the old throne is already underway beneath cobalt mines, semiconductor factories, and undersea cables. The flow that began 150 years ago when Rockefeller seized the pipelines now leads to the question of who will hold the ‘flow’ of batteries and chips.
The final chapter of the black myth of oil has not yet been written. It’s just that this time, the stage and the characters have changed.