The Seven Sisters
The classic account of the oil majors' cartel before OPEC broke it.
Summary
Anthony Sampson wrote this history of the major international oil companies in 1975, immediately after the 1973 embargo and price increases had transferred control of the industry from the companies to the producing states.
The seven companies of the title are Standard Oil of New Jersey, Royal Dutch Shell, Anglo-Persian, Standard Oil of New York, Standard Oil of California, Gulf and Texaco. Sampson traces their development from the Standard Oil dissolution and the early Middle Eastern concessions, through the Achnacarry agreement of 1928 under which they divided markets, the Red Line agreement, the Iranian nationalisation of 1951 and the coup that reversed it, the Libyan negotiations under Qaddafi that broke the companies' united front, and the formation and eventual assertion of OPEC.
His central argument is that the companies had functioned as a private government of the oil industry, setting production and prices through arrangements with each other and with their home governments, and that this system ended between 1970 and 1973 when the producing states discovered they could act collectively. He also covers the companies' relationships with the American, British and other governments and the way those relationships shaped foreign policy. Sampson wrote as a journalist with access, and the book is narrative rather than analytical. It remains the standard account of the era of company control and is essential background for anything about the oil industry since.
Key takeaways 7
- The major oil companies functioned as a private government of the industry, setting production and prices through agreements among themselves.
- The 1928 Achnacarry agreement divided world markets among the majors and established the pattern of coordination.
- Company control ended between 1970 and 1973 when producing states discovered they could act collectively.
- Libya's separate negotiations under Qaddafi broke the companies' united front and enabled everything that followed.
- The 1951 Iranian nationalisation and its reversal established that home governments would act to protect company concessions.
- Concession terms negotiated when producing states were weak were unsustainable once those states acquired the capacity to act.
- Sampson argues that the companies' relationships with their home governments shaped foreign policy rather than following it.
Who should read it
Energy investors and analysts who want the history of how oil industry control passed from companies to producing states.
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