Oil and Crisis: The Engineering of Global Instability

Oil and Crisis: The Engineering of Global Instability

This essay starts from a premise: to treat crisis as a recurring mode of operation of the modern political economy. Far from representing an undesirable interruption of order, crisis appears, historically, as one of the main mechanisms through which power, markets, and States reorganize themselves.

Since the emergence of modern political economy, crisis appears less as an accident and more as a concentrated manifestation of the system’s internal limits. What collapses is not the order itself, but a specific arrangement that can no longer sustain its own contradictions. Crisis, in this sense, does not interrupt the system: it forces it to reorganize.

Crises redistribute power, redefine prices, reorder flows, and reconstruct hierarchies. They compress into time tensions that had been accumulating slowly, making visible what, in periods of stability, remains concealed.

In the field of energy, this logic becomes particularly evident. Few assets reveal with such clarity the relationship between crisis, power, and economic reorganization as oil. Due to its material, geopolitical, and financial centrality, oil transforms each energy crisis into a systemic event, capable of crossing States, markets, and monetary regimes.

It is from this perspective that oil crises cease to be isolated episodes and come to be understood as structural moments of contemporary political economy.

Crisis as a Category of Political Economy

Without resorting to political proselytism, Karl Marx offers a useful key: crisis is not a deviation of capitalism, but one of its structural moments. Systems oriented toward accumulation tend to expand beyond their own conditions of realization. Crisis thus emerges as an internal adjustment: devaluation of capital, productive reconfiguration, and asymmetric redistribution of power. It is not an external collapse, but an internal mechanism of correction.

It is through this lens that oil crises must be read.

When oil becomes a central element of the global economy, the energy crisis occupies a singular position within political economy. It does not operate merely as an external shock, but as a point of condensation between matter, value, and power.

Oil directly connects the material base of production to the abstract mechanisms of the market. Its price increase or restriction does not affect an isolated sector, but cuts across production, transport, consumption, finance, and monetary policy. The energy crisis functions as a systemic shortcut, capable of reorganizing multiple dimensions simultaneously.

In this sense, the oil crisis is not merely a historical accident or a punctual dispute between States. It operates as an indirect form of economic reorganization, compatible with a system that stabilizes itself less through lasting equilibrium than through recurring instability.

When oil consolidates itself as the material base of the global economy, crisis ceases to signify absolute scarcity. Energy continues to exist, but access to it becomes conditioned, politically mediated, and financially filtered.

A central point of this architecture is that crisis is not defined by the absence of oil, but by control over its flows. It operates in the interval between extraction and circulation, between production and price, between formal sovereignty and economic dependence. In this intermediate space, power is exercised without needing to present itself as explicit coercion. Crisis does not destroy the industrial system: it reorganizes it under new hierarchies.

The Crises of the 1970s and the Consolidation of the Method

By the late 1960s, the international economic system was already operating under accumulated tensions. Postwar industrial expansion, the consolidation of mass consumption, and growing energy dependence had created a scenario of apparent stability, sustained by continuous flows of cheap oil. This stability, however, was fragile. It depended on a specific geopolitical architecture, based on external control of producing regions and the energy subordination of central economies.

It is within this context that the oil crises of the 1970s must be understood. The 1973 shock does not emerge as an unexpected accident, but as a direct result of the entanglement between energy and geopolitical conflict. During the Yom Kippur War, Arab oil-producing countries, organized within OPEC, imposed an embargo against the United States and its allies, using control over supply as a political instrument. The price of oil doubled within months, triggering a global recession.

This episode revealed more than the energy vulnerability of central economies. It exposed the concrete possibility of governing entire societies through controlled instability. The rise in energy prices quickly translated into inflation, economic contraction, fiscal crisis, and social tension. The responses adopted — restrictive monetary policies, fiscal adjustments, and productive reorganizations — were presented as inevitable technical solutions. Their effects, however, were profoundly asymmetric.

The oil shock functioned as a catalyst for structural transformations. The disciplining of labor, the strengthening of financial capital, and the redefinition of state priorities advanced under the argument of economic necessity. Energy, as it became expensive, ceased to be merely a productive input and began to operate as an instrument of social reorganization.

A few years later, the Iranian Revolution (1978–1979) produced a second shock. The significant interruption of Iranian production caused prices to more than double over roughly twelve months, deepening stagflationary processes in central economies and reiterating the structural vulnerability created by energy dependence.

These events were not historical exceptions. They reveal how the main producers — Saudi Arabia, Iran, Kuwait, Iraq, and other OPEC members — have shaped, since 1960, the global geopolitical board through control of supply and price coordination. Oil thus consolidates itself as a central piece of state and economic strategies.

In the following decades, the rise of financial capital deepened this dynamic. The materiality of energy came to be mediated by futures, indices, spreads, and risk curves. The price of oil became sensitive not only to physical production, but to perceptions of geopolitical risk, expectations of conflict, and the capacity for intervention of major powers.

In this regime, the time of crisis often precedes the fact. The barrel rises before the blockade. Risk is redistributed before the sanction. Volatility internalizes itself even before the physical rupture of supply, involving markets, States, and financial institutions within the same field of dispute.

The Logic of Instability

Understanding oil crises as methods of reorganizing power and value is not merely a matter of recognizing historical patterns, but of delineating the terrain upon which economies and States continue to calibrate their decisions around a resource that remains at the material and political center of the global order. They expose the functioning of financial capitalism, in which instability operates as an instrument.

In this context, oil remains a central strategic asset. Not only because of its productive function, but because it articulates natural resources, financial markets, and state decisions within the same field of dispute. Control over reserves, routes, and flows continues to be a decisive variable in the calculations of major powers.

States compete less over territory and more over continuous access to resources that sustain their economies, financial systems, and military capacities. It is on this board that crises are produced, managed, and prolonged, not as failures of the system, but as mechanisms of power reorganization.