Big oil works as a market where whoever controls the supply, from Standard Oil to the Seven Sisters to OPEC to Texas shale, sets the price everyone else lives with, and what a country builds around its oil matters more than the oil itself. The video opens on a Very Large Crude Carrier pumping close to two million barrels ashore over 24 to 36 hours. That one ship is a tiny piece of a market that moved 6.1 trillion dollars in 2024 alone, with the world burning roughly one hundred million barrels every single day.
This article follows the video’s ten chapters, from the first wells in Baku to cartels, resource curses, Saudi Aramco, American shale, the day oil went negative and the new race for cheap power. At the end, the tanker comes back with a different meaning.
Watch the full video here, or skip to the breakdown below.
The 10 chapters at a glance
- The well before the well (1:34)
- Seven companies, one world (7:00)
- Why cheap energy builds rich countries (14:59)
- The cartel that moves the price (20:39)
- The curse hidden inside the blessing (31:52)
- The company worth a trillion and a half (39:49)
- The American disruption (45:56)
- The day oil went negative (52:14)
- The new race for cheap power (56:52)
- The counterpoint, measured honestly (1:02:13)
1. The well before the well
Textbooks say the oil age began in 1859 in Titusville, Pennsylvania, when Edwin Drake drilled sixty nine feet and struck oil. That strike is real, the video says, but Titusville was not first. In 1846 a mechanically drilled well was already producing in Baku, in what is now Azerbaijan, and by the late 1800s Baku produced roughly half the world’s oil. Ludvig and Robert Nobel built pipelines and the region’s first tankers there, and their brother Alfred later funded his prize partly with Baku oil money.
Pennsylvania producers settled on the 42 gallon barrel in 1866, a size that weighed close to 300 pounds when full, about what one strong worker could roll onto a wagon. It is still how the world prices oil. Then came John D. Rockefeller’s Standard Oil, which controlled around 90 percent of American refining before the Supreme Court broke it into 34 companies in 1911. Pieces became Exxon, Mobil and Chevron.
Some of the biggest players are barely household names. Vitol, a private trader with no gas station, traded 331 billion dollars of oil in 2024. Petrochemicals show up in 95 percent of manufactured goods. And long before OPEC, the Texas Railroad Commission set monthly production quotas, proving that a handful of people could set a global price just by deciding how much came out of the ground.
Everything in this story comes down to who controls what gets loaded onto the ships, and at what price.
2. Seven companies, one world
For most of the twentieth century, seven companies ran the global oil trade: Anglo-Persian Oil (later BP), Gulf Oil, Royal Dutch Shell, Standard Oil of California, Standard Oil of New Jersey, Standard Oil of New York and Texaco. They controlled fields, pipelines, tankers, refineries and gas stations. In 1928, three of them signed the As Is Agreement at Achnacarry Castle in Scotland, freezing market shares and discouraging price cutting.
The nickname Seven Sisters came from a rival, Enrico Mattei of Italy’s state oil company Eni, who coined it as an insult after being shut out of the group’s Middle East deals. Economist John Blair documented how the sisters matched output to demand without publishing a price list, in his 1976 book The Control of Oil.
Iran shows the grip clearly. Its elected prime minister, Mohammad Mossadegh, nationalized the oil industry in 1951, and in 1953 a coup backed by British and American intelligence removed him. Oil returned to foreign hands under terms far more favorable to the companies. That held until the 1970s, when nationalizations swept the Middle East, Latin America and North Africa. Saudi Arabia took a slow route and owned Aramco fully by 1980. Libya threatened to cut supply and the companies caved. Iraq, Kuwait and Venezuela followed.
By 2012 only around 7 percent of the world’s oil reserves stayed with the old private companies. Russia later showed a different form of the same pattern when Yukos was hit with roughly 27 billion dollars of tax claims and its main unit was sold for 9.35 billion dollars before the state company Rosneft absorbed it.
Governments now hold the taps that companies used to control.
3. Why cheap energy builds rich countries
Research has shown for over a century that countries using more energy per person tend to have much higher income per person. Energy is the raw material behind factories, farm equipment, hospitals and computers. Global energy employment reached 76 million jobs in 2024, and oil and gas pay the highest average wages in energy.
The link is not universal. Economist Paul Collier called the exception the natural resource trap in his book The Bottom Billion, finding that resource-rich developing countries grew slower on average, with the gap tracing to weak governance more than to the resource.
Kuwait moved first. It founded the Kuwait Investment Authority in 1953, widely considered the world’s oldest sovereign wealth fund, which by 2026 was estimated at north of one trillion dollars. The sharper test came in the North Sea. Norway and the UK drew a dividing line in 1965, and both struck oil within five years. Britain spent its share almost as fast as it came out, largely on current spending and tax cuts. Norway passed the law creating its Government Pension Fund Global in 1990, put in its first krone in 1996, and chose to lock the windfall away for citizens not yet born. It held close to two trillion dollars by 2025, the largest single asset owner in the world.
Nigeria shows the other side: it pumps more crude than almost anywhere in Africa, yet only around 61 percent of its people have reliable electricity.
Two countries pulled crude from the same sea, and the gap between them came down to paperwork, not what sat underground.
4. The cartel that moves the price
In September 1960, delegates from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in Baghdad and formed OPEC to coordinate output and defend prices against the Seven Sisters. It borrowed its basic strategy, controlling price by controlling supply, from the Texas Railroad Commission, and has been based in Vienna since 1965.
In October 1973, during the Arab Israeli war, Arab members cut off shipments to countries seen as supporting Israel. The price roughly quadrupled within months, from about three dollars a barrel to around twelve, and gas lines wrapped around American city blocks. Economist James Hamilton later found that nearly every US recession since World War II was preceded by a sharp oil price spike.
In 1978 and 1979, an Iranian refinery strike and then the revolution cut Iran’s output, and although global supply fell only around 4 percent, panic buying took prices from roughly 16 dollars to nearly 40 within a year. Fear moves prices as much as barrels do. Then in 1985 Saudi Arabia, tired of cutting output while others cheated on quotas, opened its taps, and oil fell from around 30 dollars to under 10 by 1986. OPEC can crash prices as fast as it raises them.
The 1973 embargo also created the petrodollar loop: OPEC members took in roughly 450 billion dollars more than they spent between 1974 and 1981, and much of it was recycled into US Treasury securities and loans to developing nations. Iraq’s 1990 invasion of Kuwait sent prices from about 21 to near 46 dollars. In 2016, Russia became OPEC’s closest ally through OPEC Plus, which together control roughly 40 percent of world supply. Even so, a major review concluded OPEC has real market power but nowhere near a textbook monopolist’s, since quota cheating and outside producers blunt it.
5. The curse hidden inside the blessing
Economists call it the resource curse: abundant natural resources that fail to make ordinary citizens wealthier, and sometimes make things worse. Easy resource money can crowd out other industries, distort a currency, encourage corruption and leave a country dependent on one commodity whose price it does not control. A 1995 study by Jeffrey Sachs and Andrew Warner of about 95 developing countries found that those with higher resource exports relative to income grew slower. Not everyone agrees, and a 2008 study using resources still in the ground found no reliable link, so the debate stays open.
The mechanism has its own name, Dutch disease, coined in 1977 after the Netherlands found the Groningen gas field in 1959. Gas exports strengthened the currency, other exports became less competitive and manufacturing declined, with no scandal and no stolen dollar.
Venezuela is the starkest case. It holds roughly 303 billion barrels, more than Saudi Arabia’s 267 billion. Much of it is extra heavy crude that needs expensive infrastructure and skilled workers, and both eroded. Output fell from about 3.1 million barrels daily in 1998 to roughly 800,000 to 900,000 today, and the economy contracted by more than 75 percent between 2013 and 2021. Political scientist Terry Lynn Karl argued that oil booms push governments toward large bureaucracies funded by resource rent instead of broad taxes, which buckle in a bust.
Three economists later modeled the split: countries with producer-friendly institutions turned resource wealth into growth, while those where grabbing paid better than producing saw decline.
Oil wealth is a multiplier, not a guarantee. It amplifies whatever is already happening inside a country’s institutions.
6. The company worth a trillion and a half
No company moves more oil than Saudi Aramco, and its core asset is Ghawar, discovered in 1948. It stretches roughly 280 kilometers by 30, is the largest conventional oil field ever found, and has produced more than 65 billion barrels. It supplied roughly 60 to 65 percent of Saudi output between 1948 and 2000.
In December 2019 Aramco listed 1.5 percent of itself on the Saudi stock exchange and raised 25.6 billion dollars, the largest IPO in history at the time, valuing the company at about 1.7 trillion dollars. Saudi officials had hoped for a larger listing abroad at a valuation as high as 2 trillion, but investors pushed back over transparency, so the kingdom settled for the domestic listing.
Low extraction costs give Aramco its edge. It reported 106.2 billion dollars in net profit in 2024, more than ExxonMobil, Chevron, Shell, BP and TotalEnergies made combined, at around 95 billion dollars. Economist Morris Adelman located OPEC’s real power in that cost gap rather than scarcity: a few low-cost producers set the price everyone else has to live with.
Most Saudi oil now heads east to China, India, Japan and South Korea, so the opening tanker is more likely bound for Guangdong or Gujarat than Rotterdam. Other state giants like Rosneft, PetroChina, Sinopec, Petrobras and Pemex use the same model, but a study of national oil companies found that performance depended less on geology than on how much operational independence from politics a company had.
7. The American disruption
For most of the late twentieth century, American oil production was in long decline. Around 2008 that changed, when hydraulic fracturing combined with horizontal drilling unlocked oil trapped in shale rock. The Permian Basin alone came to account for roughly half of American crude, and output reached a record 13.6 million barrels a day in 2025, about 40 percent above Russia or Saudi Arabia that year.
That loosened America’s dependence on Gulf oil and gave OPEC a swing producer it could not control. Shale also behaves differently: a well declines quickly after its first year, so producers must keep drilling to hold output flat, which makes supply far more responsive to price.
The benefits reached households too. Two researchers estimated that falling US natural gas prices between 2007 and 2013 produced about 74 billion dollars in consumer benefits by 2013. Mexico shows the opposite direction: its Cantarell field peaked at 2.1 million barrels daily in 2004 and made about 158,000 by 2022.
The collision came in 2014. With shale surging and Saudi Arabia refusing to cut, Brent fell from above 100 dollars to below 30 by January 2016. Saudi officials later admitted part of the aim was to make shale unprofitable. Many drillers went bankrupt, but wells can be drilled far faster than Saudi fields can be developed, so American production climbed back past its earlier level. OPEC won the price war on paper and could not make shale go away.
A price shock still hurts, but there is now more supply competing to fill the gap.
8. The day oil went negative
On April 20, 2020, the WTI crude futures contract, which had existed since 1983 and never gone negative, fell to around negative 37 dollars a barrel. For a few hours sellers were effectively paying buyers to take oil. Some trading software could not process the negative number, so traders phoned trades in by hand.
The cause was physical. In March, Russia rejected OPEC’s cuts and Saudi Arabia answered with a price war while lockdowns crushed demand. Producers kept pumping because restarting wells is expensive. US refinery runs fell to around 12.8 million barrels daily, down about 24 percent from a year earlier, and the storage hub in Cushing, Oklahoma, filled to around 81 to 83 percent of capacity.
With land full, about 104 tankers gathered off American shores as floating storage. Traders holding contracts about to expire had to accept oil they could not store or pay someone to take the contract. This ties to Hamilton’s earlier work on the 2008 spike above 145 dollars, which he blamed on demand colliding with supply that could not keep pace, a physical mismatch rather than a financial one.
Prices recovered within weeks, but the day showed how thin the line is between an abstract financial market and a real tanker waiting for somewhere to unload.
Oil went negative because a market ran out of room to hold what nobody wanted right then.
9. The new race for cheap power
A common assumption says China’s factories and data centers run on artificially cheap electricity. Research cited in the video puts industrial power along China’s coast at roughly 8 to 14 cents per kilowatt hour, comparable to or higher than in the United States.
The demand is real. A national laboratory report found data centers used about 4.4 percent of US electricity in 2023, roughly double their 2017 share, and projected 6.7 to 12 percent by 2028, driven mostly by AI servers.
The new low cost players sit in the Gulf. Industrial electricity in the UAE can run as low as around 7 cents per kilowatt hour, backed by abundant natural gas. Microsoft committed more than 15 billion dollars to data center and AI infrastructure there in 2025. In spring 2025, Saudi Arabia’s Public Investment Fund launched Humain to build several gigawatts of AI computing capacity and its own large language model, with partnerships including Nvidia, AMD and Qualcomm.
The point is that oil money nationalized in 1980, invested through a sovereign fund for decades, is now being redirected into AI infrastructure: three eras running on the same original barrel. Even the AI tool on your phone likely runs through a data center whose electricity bill traces back to a gas field a continent away.
Cheap energy, wherever it exists, becomes the foundation other industries build on.
10. The counterpoint, measured honestly
Fossil fuels are not destined to stay the permanent foundation of the economy, the video concedes. A surprising point is that petrochemicals, the feedstock for plastics, fertilizers and synthetic fabrics, are now the single largest driver of new global oil demand growth, ahead of transportation. Two transitions are running inside the same barrel at different speeds.
Since the mid-1990s, countries such as Sweden and Germany have partially decoupled economic growth from energy growth, even after accounting for energy embedded in imports. Renewables supplied 32 percent of global electricity in 2024, projected to reach 43 percent by 2030, and are expected to overtake coal as the largest source. Solar costs have fallen so far that well-financed projects in strong sunlight are described as the cheapest electricity in human history. A 2022 study led by Rupert Way and J. Doyne Farmer found that solar, wind and batteries follow a predictable cost decline, and that a fast shift would save the global economy trillions of dollars, before counting any climate benefit.
Transport is slower and more uneven. More than a quarter of new cars sold worldwide in 2025 were projected to be electric, with China approaching half of its domestic sales, while elsewhere adoption trails. Solar panels on a grid do not stop plastics, shipping and aviation pulling on oil.
The honest picture, it concludes, is a slower, uneven transition shaped by the same institutions and geography that decided who won in the oil age.
Back to the tanker
That crude carrier is still out there, loading or unloading, indifferent to holidays, wars and pandemics. It has made the same trip since Ludvig Nobel’s ships carried Baku’s crude across the Caspian, and for a few weeks in April 2020 more than a hundred like it sat idle with nowhere to dock. Energy sits underneath every other kind of wealth, and whoever influences its price sets the pace for what the rest of the world builds on top.
Every country in the video ended up somewhere different because of what it built around its resource, not the resource itself. Your own income works the same way: what matters less is how much comes in, and more is what gets built around it once it lands. Kuwait started its fund in 1953, Norway started decades later, and neither needed a barrel of oil under the house first.
FAQ
How does big oil actually work?
A few controlling forces set the price: Standard Oil and the Seven Sisters in the past, then OPEC and state companies like Saudi Aramco, with American shale now acting as a flexible swing supplier. Who controls what gets loaded onto ships, and at what price, is the core of the business.
Who controls the price of oil?
No one fully does. The video cites a major review concluding OPEC has real market power but far less than a textbook monopolist, because quota cheating and outside producers blunt its pricing power.
What is the resource curse?
It is the pattern where abundant natural resources fail to make ordinary citizens wealthier. Easy resource money can crowd out other industries, distort a currency, encourage corruption and leave a country dependent on one commodity.
Why did oil prices go negative in 2020?
Demand collapsed during lockdowns while producers kept pumping, and storage at Cushing, Oklahoma, was nearly full. Traders with expiring futures contracts had nowhere to put the oil, so the price fell to around negative 37 dollars a barrel.
Why do some oil-rich countries stay poor?
The video says oil is a multiplier, not a guarantee. Strong institutions turned it into funds like Kuwait’s and Norway’s, while weak ones, as in Venezuela, saw production and the economy collapse.
How did Texas shale change the oil market?
Fracking and horizontal drilling reversed American decline, taking output to a record 13.6 million barrels a day in 2025. Shale wells can be drilled quickly, so American supply responds fast to price and OPEC cannot control it.
