The term “Seven Sisters” refers to a group of seven major oil companies that dominated the global petroleum industry from the mid-20th century until the 1970s. These companies wielded immense economic and political power, shaping international relations and influencing global oil prices. Here’s an overview of the Seven Sisters and their impact on the world:
The Seven Sisters
The companies traditionally recognized as the Seven Sisters were:
- Standard Oil Company of New Jersey (Exxon, later ExxonMobil)
- Royal Dutch Shell
- Anglo-Persian Oil Company (later British Petroleum, BP)
- Standard Oil Company of New York (Socony, later Mobil, then merged with Exxon to form ExxonMobil)
- Standard Oil Company of California (Chevron)
- Gulf Oil
- Texaco
These companies were characterized by their global reach, significant reserves, vertical integration (controlling multiple stages of the oil production process), and substantial political influence. They operated as a de facto cartel, coordinating production levels and pricing to maintain their dominance over the global oil market.
Historical Context and Formation
The origins of the Seven Sisters trace back to the early 20th century:
- Colonial Expansion: European powers like Britain and the Netherlands established oil companies to secure energy supplies for their empires.
- Formation of Majors: Companies like Shell (founded in 1907) and Anglo-Persian Oil Company (later BP, established in 1908) emerged to exploit oil resources in the Middle East and elsewhere.
Dominance and Market Control
During their peak:
- Global Operations: The Seven Sisters controlled the majority of the world’s oil reserves and production.
- Cartel-like Behavior: They operated informally as a cartel, coordinating pricing and production to stabilize markets and maximize profits.
- Political Influence: Their economic power translated into significant political influence, both domestically in their home countries and internationally in oil-producing nations.
Challenges and Decline
- Nationalization Movements: In the 1950s and 1960s, many oil-producing countries, particularly in the Middle East, began nationalizing their oil industries. This trend challenged the dominance of the Seven Sisters.
- Oil Crises: The 1970s saw two major oil crises (1973 and 1979) that disrupted global oil markets and highlighted vulnerabilities in the global oil supply chain.
- Shift in Power: The rise of OPEC (Organization of the Petroleum Exporting Countries) in the 1960s and 1970s, along with the nationalization of oil resources, shifted power away from the Seven Sisters towards oil-producing nations.
Legacy and Modern Context
- Legacy of Influence: Despite their decline in dominance, the Seven Sisters left a lasting legacy on the oil industry’s structure and dynamics.
- Transformation: Many of the original Seven Sisters merged or were acquired by other companies over time, reshaping the global oil landscape.
- Modern Oil Companies: Today, a handful of major international oil companies, along with state-owned enterprises, dominate global oil production and markets.
In summary, the Seven Sisters were a powerful oligopoly that controlled global oil production and pricing for much of the 20th century. Their influence extended beyond economic realms, shaping geopolitical strategies and global economic policies. Their decline in dominance marked a shift in global energy dynamics and paved the way for a more diverse and competitive global oil market.