Seven Sisters
Seven Western oil companies that ran most of the world's oil from the 1940s to the 1970s, setting prices without consulting the producing countries.
For roughly thirty years, the price of the world's most important commodity was set in boardrooms in New York, London, and Houston, and almost never in the countries where the oil actually came out of the ground. Seven companies made those decisions. An Italian rival, Enrico Mattei, who ran Italy's state oil firm and was locked out of their club, gave them the name that stuck: the Seven Sisters. Between them they controlled roughly 85 percent of the oil reserves outside the United States and the Soviet Union, and they behaved less like competitors than like a family business.
The family tree
Three of the sisters were pieces of a single shattered giant. When the US Supreme Court broke up John D. Rockefeller's Standard Oil in 1911, the fragments included Standard Oil of New Jersey (later Esso, then Exxon), Standard Oil of New York (Socony, later Mobil), and Standard Oil of California (Socal, later Chevron). The other four came from elsewhere: Britain's Anglo-Persian Oil Company (later BP), the Anglo-Dutch Royal Dutch Shell, and two children of the 1901 Spindletop gusher in Texas, Gulf Oil and Texaco. Each was vertically integrated, owning everything from the wellhead to the corner gas station. Rivals on paper, they learned early to cooperate.
As-is: the gentlemen's cartel
In 1928 the heads of Jersey Standard, Shell, and Anglo-Persian met secretly at Achnacarry Castle in the Scottish Highlands and signed the As-Is Agreement: freeze market shares as they are, avoid price wars, carve up the world. That pact and the arrangements that grew around it let the sisters manage output and prices with the calm of a public utility. Producing nations collected a fixed royalty and had almost no say. When Iran's Mohammad Mossadegh tried to nationalize Anglo-Iranian oil in 1951, a 1953 coup backed by the CIA and MI6 removed him and handed the fields to a Western consortium.
How the grip broke
The producers organized. OPEC was founded in Baghdad in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, and was at first brushed aside. The reckoning came in October 1973, when the Arab members cut production and embargoed the West during the Yom Kippur War, and the price of oil roughly quadrupled in a matter of months. A wave of nationalizations followed. Saudi Arabia took full control of Aramco by 1980; Venezuela, Libya, Kuwait, and others seized their fields outright. Power over price migrated from Houston to Riyadh and Caracas.
The sisters did not vanish. As margins tightened they merged into fewer, larger firms, the supermajors: Exxon swallowed Mobil, Chevron absorbed Gulf and then Texaco, BP bought Amoco. Their four descendants still rank among the largest companies on earth. But they no longer decide what oil costs. That call now belongs to a meeting room in Vienna, where OPEC ministers sit in the seats the sisters once owned.