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oil

When the first oil well was drilled in 1859 in

Titusville, Pennsylvania, oil, which is also called

petroleum, was used primarily for illumination.

The single most significant incentive to develop

the oil industry was the arrival of the motorcar,

run on gasoline, at the turn of the 20th cen-

tury. Today, oil is used in producing a variety

of products besides gasoline, including asphalt,

explosives, fertilizers, jet fuel, medicines, paints,

plastics, rubbers, waxes, and others. Because it is

a resource that is in high demand throughout the

world, oil plays a significant role in international

economics and politics.

The United states is the largest consumer of

oil, accounting for 25 percent of world oil con-

sumption in 2007. china is a distant second, at

about 8 percent, and Japan third, at 6.5 percent. As

of 2004, 57 percent of total proven oil reserves are

located in countries bordering the Persian Gulf,

with about one-fourth of the world’s proven oil

reserves in saUdi arabia alone. iraq, iran, Kuwait,

and the United Arab Emirates are the countries

with the second, third, fifth, and sixth largest

proven oil reserves, respectively. Other countries

with high proven oil reserves include libya and

Nigeria, which are the ninth and 10th largest.

At first, the oil resources of countries with

Muslim majority populations were under direct

or indirect outside control; for example, Iraq

and Kuwait were under British colonial control,

and Iran was under British and Russian influ-

ence. Saudi Arabia, while an independent king-

dom, conceded development and control of its

oil resources to American petroleum companies.

Therefore, oil resources in such countries were

directly controlled by a number of foreign com-

panies. In exchange for these concessions over

control of their oil production, the host countries

received a percentage of the revenue generated.

Initial attempts to seize control by the host coun-

tries were met with failure—in 1951 Muhammad

Musaddiq (d. 1967), the prime minister of Iran,

nationalized the British-owned oil company in

charge of Iran’s oil, but in 1953 a coup instigated

by the United States ousted Musaddiq and put a

pro-U.S. leader, mUhammad reza pahlavi, back

into power. He quickly offered oil concessions

to the West. However, with the formation of the

organization oF petroleUm eXporting coUntries

(OPEC) in 1960 and the widespread nationaliza-

tion of domestic oil resources in the 1970s, oil-

producing countries gained control over their oil

production and price setting.

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