The Geopolitics of Crude Oil: Why "Black Gold" Still Rules the World in 2025

The Geopolitics of Crude Oil: Why “Black Gold” Still Rules the World in 2025

It’s December 2025. EVs are everywhere, yet the world consumes 103 million barrels of oil daily.

This deep dive uncovers the messy divorce from fossil fuels, the rise of the “Shadow Fleet,” and why geography is still destiny in the race for energy dominance.

TL;DR: The CliffsNotes Version

If you don’t have time to read the whole saga (though I really hope you do), here is the cheat sheet for the state of the world as of late 2025:

• The “Long Goodbye” is Violent: We are transitioning away from oil, yes. But this isn’t a smooth handoff; it’s a messy divorce. While China’s demand has officially peaked, the fight for the remaining market share is getting nastier, not nicer.
• Geography is Destiny (Again): It’s not just about how much oil you have anymore; it’s about how you move it. The choke points—Hormuz, Malacca, and the Bab el-Mandeb—are the most dangerous places on Earth. If you control the straits, you control the lights.
• The US is the “Swing King”: The Shale Revolution didn’t just make the US energy independent; it made it the world’s largest producer (hitting a record 13.5 million barrels per day this year). This allows Washington to be far more selective about which Middle Eastern conflicts it engages in compared to 1990.
• The “Shadow Fleet” is the New Normal: Sanctions on Russia and Iran didn’t stop the oil; they just drove it underground. A massive, unregulated fleet of roughly 1,400 ghost ships is moving energy around the world, completely bypassing Western financial systems and risking environmental catastrophe daily.
• It’s Not Just Fuel, It’s Everything: Even if every car becomes an EV tomorrow, we still need crude. It’s in your phone casing, your fertilizers, your pharmaceuticals, and your clothes. The geopolitical leverage of oil producers isn’t disappearing; it’s just shifting sectors from transport to petrochemicals.

Introduction: The Black Blood of the World

I want you to picture something with me.

It’s the summer of 2008. I’m standing at a gas station in a suburb of Atlanta. The humidity is choking, sticky and gross. But what’s making me sweat isn’t the heat; it’s the numbers rolling on the pump display.

The price of a barrel of oil has just hit $147. People are shouting at the cashier. I remember watching a guy fill up a massive SUV, staring at the pump like he was watching his house burn down.

That moment stuck with me. It wasn’t just about money. It was about vulnerability.

Fast forward to today, December 5, 2025. I checked the markets this morning. Brent Crude is hovering around $74, bouncing like a yo-yo due to the latest OPEC+ announcements.

We have electric vehicles (EVs) everywhere now—sales in China just hit another record high.

Solar panels are on millions of roofs. We talk about “Net Zero” and “Green Transitions” constantly.

And yet? The world still consumes roughly 103 million barrels of oil every single day.

If you want to understand why countries invade their neighbors, why currencies crash, or why specific dictators get red carpet treatment in democratic capitals, you have to follow the crude. Oil isn’t just a commodity like coffee or wheat.

It is the blood in the veins of the international system.

It is the single most important strategic asset on the planet, and despite what the tech bros in Silicon Valley tell you, it isn’t going away quietly.

I’ve spent my career watching the maps change, borders shift, and governments fall, all because of what lies beneath the sand and the seabed. Today, I want to walk you through the real mechanics of how this works.

No academic fluff.

Just the raw, unfiltered reality of the geopolitics of crude oil.

Historical Context: How We Got Hooked

To understand 2025, we have to look back. You can’t understand the ending of a movie if you missed the first act.

1. The Marriage of Convenience (1945)

The modern oil age has a birthday: February 14, 1945. It happened on a ship, the USS Quincy, anchored in the Suez Canal. US President Franklin D. Roosevelt met with King Abdulaziz of Saudi Arabia.

The deal was simple, brutal, and brilliant. The United States needed reliable, cheap oil to fuel its post-WWII economy and military machine. Saudi Arabia needed security and protection from its regional rivals.

They shook hands on a pact: We give you security; you give us oil. That handshake defined the next 80 years of foreign policy.

It’s why the US has been entangled in the Middle East for as long as most of us have been alive.

2. The Weaponization (1973)

This is the moment the world realized oil wasn’t just a fuel—it was a weapon. In October 1973, in response to Western support for Israel during the Yom Kippur War, the Arab oil producers (OPEC) turned off the tap.

They embargoed the US and its allies. Prices quadrupled from $3 to $12 overnight. It was chaos.

Lines at gas stations stretched for blocks. But it taught us a permanent lesson: If you rely on someone else for your energy, they own you.

This trauma birthed the International Energy Agency (IEA), the Strategic Petroleum Reserve, and the desperate search for oil elsewhere (like the North Sea and Alaska).

3. The 2014 Crash & The Birth of OPEC+

Skip forward to 2014. Saudi Arabia tried to kill the rising US shale industry by flooding the market, driving prices down to bankrupt American drillers. It backfired. The Americans got leaner and more efficient.

The result? Saudi Arabia realized it could no longer control the market alone.

This led to an unlikely alliance in 2016: OPEC (led by the Saudis) teamed up with Russia (a non-OPEC giant) to form OPEC+. This marriage of convenience between Riyadh and Moscow is the dominant force in oil supply today.

They coordinate cuts to keep prices high, often at the expense of Western inflation.

4. The Shale Revolution (2010s - Present)

This is the plot twist nobody saw coming. For decades, the narrative was “Peak Oil”—the idea that we were running out. Geologists thought the US was tapped out.

Then came hydraulic fracturing, or “fracking.” American engineers figured out how to blast water, sand, and chemicals into shale rock to release trapped oil and gas.

Almost overnight, the US went from being the world’s biggest beggar for oil to the world’s biggest producer.

By late 2024, US production hit a staggering 13.5 million barrels per day, a record that still stands in 2025. This changed the map. Suddenly, the US didn’t need the Middle East for survival anymore.

It gave American Presidents the ability to look at the Persian Gulf and say, “Not my problem.” (Even though, as we’ll see, it still kind of is).

The Current Landscape: The World in Late 2025

So, here we are in December 2025. What does the chessboard look like right now?

The energy transition is in full swing, which makes this the most dangerous time in history for energy markets.

We are in the “Messy Middle.” We haven’t fully built the green infrastructure to replace fossil fuels, but we’re investing enough in green tech that investors are scared to put money into new oil wells.

This leads to a paradox: Demand is flattening, but supply is artificially tight. Let’s look at the players.

The “Big Three” are still the Big Three:

1. The United States (The Swing King): The US is currently the undisputed heavyweight champion of production. The Permian Basin in Texas and New Mexico is an absolute juggernaut, producing more oil on its own than most countries.

Because the US is energy independent, its foreign policy has become more isolationist.

We see this in how Washington deals with conflicts in the Red Sea—reluctant to intervene with boots on the ground, preferring to let regional powers sweat.

The US uses its massive oil and LNG (Liquid Natural Gas) exports as a geopolitical shield, helping Europe stay off Russian energy.

2. Saudi Arabia (The CEO of Oil): Under Crown Prince Mohammed bin Salman (MBS), Saudi Arabia has realized the clock is ticking. They know the oil age has an expiration date. Their strategy in 2025 is “Saudi First.” They don’t care about pleasing Washington anymore.

They care about keeping the price of oil high enough (around $80) to fund their massive “Vision 2030” projects—like Neom, the futuristic city in the desert.

Just this month, OPEC+ announced they are delaying production hikes again until April 2026 to prop up prices. They are ruthlessly cutting production, sacrificing market share to maintain value.

3. Russia (The Pariah Dealer): Since the invasion of Ukraine in 2022, Russia has been kicked out of the Western financial system. But Russia is a gas station masquerading as a country; it has to sell oil to survive. So, they pivoted East.

In 2025, almost all Russian oil flows to China and India. They sell it at a discount, but they sell enough volume to keep their war machine running.

Russia has proven resilient, but its oil infrastructure is aging, and without Western tech, their long-term output is questionable.

The Hungry Giant: China

China is the world’s largest importer of crude, importing about 70-75% of its needs. But here is the big news of 2025: China’s oil demand has officially peaked.

Driven by a massive uptake in EVs (now over 50% of new car sales in China) and LNG-powered trucks, China’s thirst for gasoline is dying. This terrifies global producers who relied on Chinese growth for twenty years.

However, Beijing is still vulnerable.

They look at the map and see that their oil has to travel by ship through chokepoints controlled by the US Navy.

This “Malacca Dilemma” (named after the Strait of Malacca near Singapore) drives everything China does, from their naval buildup to their Belt and Road Initiative.

Real-World Case Studies

Let’s ground this in reality with four examples of how this plays out in the real world right now.

Case Study 1: The Shadow Fleet & The Death of Transparency

Remember when we could track oil tankers easily? Those days are gone.

After the West sanctioned Russia, Moscow built a “Shadow Fleet.” We are talking about roughly 1,400 aging, rusty tankers with obscure ownership structures, registered in places like Gabon, the Cook Islands, or Panama.

These ships turn off their transponders (AIS) to “go dark.”

They meet in the middle of the ocean—often near the Azores or off the coast of Greece—and perform ship-to-ship transfers. They pump oil from a Russian ship to a “neutral” ship to mix the crude, disguising its origin.

Why this matters: It has broken the global safety mechanism. In 2024 and 2025, we saw near-misses and engine failures in the Danish Straits involving these uninsured junk ships. Geopolitically, it proves that sanctions are incredibly hard to enforce on a commodity the world is addicted to. The oil finds a way.

Case Study 2: Guyana—The Lottery Winner’s Curse

If you look at South America, keep your eyes on Guyana. A few years ago, it was one of the poorest countries in the hemisphere. Then, ExxonMobil found a massive amount of oil off the coast.

Now, Guyana is producing over 650,000 barrels per day—an insane amount for a country of 800,000 people.

But this wealth brought wolves. Venezuela, its neighbor to the west, passed a law in 2024 declaring the Essequibo region (two-thirds of Guyana) as a new Venezuelan state.

Throughout late 2024 and 2025, we’ve seen Venezuela building military infrastructure, including a bridge to Ankoko Island on the border, rattling its saber.

Why this matters: It shows that oil doesn’t just bring money; it brings danger. The US has had to quietly step up military cooperation with Guyana to prevent a war. It’s a classic 19th-century resource grab happening in the 21st century.

Case Study 3: The India Pivot (The Global Laundromat)

India is the sleeper hit of the 2025 energy market. As China’s economy matures and slows down, India is the new engine of growth. India needs energy, and they are ruthlessly pragmatic about where they get it.

Despite pressure from the West to isolate Russia, India said, “No thanks.” They have been buying cheap Russian crude by the boatload, refining it in the massive Jamnagar refinery complex, and—get this—selling the refined diesel back to Europe.

Why this matters: It exposes the hypocrisy of global geopolitics. Europe gets to say they aren’t buying Russian oil, but they are buying Indian diesel made from Russian oil. India makes a profit, Russia stays afloat, and Europe keeps the lights on. It’s a complex dance where everyone pretends to follow the rules while breaking them.

Case Study 4: The Red Sea Crisis & The Suez Bypass

We cannot talk about 2025 without mentioning the Red Sea. Following the Houthi attacks that began in late 2023, the Suez Canal—once the highway for 10% of global oil trade—has become a “no-go” zone for many Western tankers.

Instead of risking drone strikes, major fleets are routing ships around the Cape of Good Hope in Africa. This adds 10 to 14 days to the journey and burns massive amounts of fuel.

Why this matters: It proves that Geography is Destiny. A small militia group with cheap drones has effectively closed one of the world’s vital arteries, forcing the global economy to take the long way home. It adds an “instability premium” to every barrel of oil you buy.

FAQ: The Stuff You Actually Want to Know

I know you have questions. Here are the ones I get asked most often when I’m at a dinner party and people find out what I do.

Q1: Is the “Petrodollar” actually dead?

Short Answer: No, but it’s definitely coughing.

Long Answer: For decades, oil was sold almost exclusively in US Dollars. This created a massive artificial demand for the Dollar, strengthening US power. In 2025, we are seeing cracks. China is buying Saudi oil in Yuan. India is buying Russian oil in Rupees or Dirhams. The monopoly is over. However, the Dollar is still the king of stability. Most countries still prefer dollars because they can spend them anywhere. The Petrodollar isn’t dead, but it’s sharing the throne now.

Q2: Why doesn’t the US President just lower gas prices?

Short Answer: Because he’s not a wizard.

Long Answer: Oil is a global commodity. The price is set by global supply and demand, not the Oval Office. A war in Libya, a hurricane in the Gulf of Mexico, or a decision by a Prince in Riyadh affects the price at your local pump more than the US President does. The President can release oil from the strategic reserves (a band-aid) or encourage drilling, but they cannot control the global market price.

Q3: If we are switching to Green Energy, why is oil demand still high?

Short Answer: Petrochemicals.

Long Answer: Only about 40-50% of a barrel of oil goes into cars as gasoline. The rest? It’s jet fuel (planes can’t run on batteries yet), heavy fuel for cargo ships, asphalt for roads, and—most importantly—plastics. Look around the room you are in. The paint on the wall, the carpet, your laptop casing, your polyester shirt, your fertilizer for food. It’s all oil. Even if we electrify all transport, we still need crude for the physical “stuff” of modern civilization.

Q4: Is “Peak Oil” real?

Short Answer: Yes, but it’s about demand, not supply.

Long Answer: We used to think we’d run out of oil (Peak Supply). That was wrong; thanks to fracking, we have plenty. Now, we are approaching “Peak Demand”—the point where humanity’s thirst for oil stops growing. Most experts in late 2025 agree we are hitting that plateau right now, largely because China’s demand has flattened. That’s scary for producers—if demand drops, prices crash.

Q5: Why is diesel still expensive if crude prices are dropping?

Short Answer: We ran out of refineries.

Long Answer: While crude oil supply is high, our ability to turn it into useful fuel (refining) is bottlenecked. During the pandemic, many old refineries shut down and never reopened. Environmental regulations make building new ones in the West almost impossible. So, even if oil is $70, the machine that turns it into diesel is running at max capacity, keeping fuel prices stubbornly high.

Q6: Will the Middle East collapse when the oil runs out?

Short Answer: It’s a race against time.

Long Answer: That is the multi-trillion dollar question. Countries like Saudi Arabia and the UAE are frantically trying to diversify their economies (tourism, finance, tech) before the oil revenue dries up. The Gulf states might make it because they have huge sovereign wealth funds. But countries like Iraq, Libya, and Iran? If oil value crashes before they fix their economies, we are looking at state failure and massive instability.

Future Outlook: What Lies Ahead (2026-2030)

So, where do we go from here? Looking into my crystal ball for the next five years, here is what keeps me up at night.

1. The “Stranded Asset” Panic

There are trillions of dollars of oil still in the ground that is listed as “assets” on the balance sheets of companies and countries. If the world gets serious about climate change, that oil must stay in the ground.

That means those assets are worth zero. When the markets truly realize this, we could see a financial crisis that makes 2008 look like a picnic.

We will see a desperate rush by producers to pump as much as they can, as fast as they can, to sell it before it becomes worthless.

This is the “Green Paradox”—the fear of green policy actually increases oil production in the short term.

2. From Petrostates to Electrostates

The geopolitics of oil is slowly morphing into the geopolitics of Critical Minerals. The power map is shifting. The Middle East was the center of the 20th century because of oil. The center of the 21st century will be places rich in Lithium, Cobalt, Copper, and Nickel (Chile, Congo, Australia, Indonesia).

We are trading our dependence on OPEC for dependence on a new cartel of mineral producers.

The EU’s “Critical Raw Materials Act” and the US’s fight for African mining rights are the opening moves of this new Great Game.

3. The Carbon Border Tax Wars

This is the next big trade war. Europe is already implementing the Carbon Border Adjustment Mechanism (CBAM).

They are saying, “If you want to sell goods in Europe, you have to pay a tax based on how much carbon was emitted to make them.” This effectively penalizes countries that run on dirty energy. It turns energy policy into trade policy. We will see the world split into “Green Trade Blocs” (EU, maybe US) and “Dirty Trade Blocs” (Russia, parts of Asia).

4. The Rise of the Global South Consumer

While China and the West slow down, the energy torch is being passed to India, Southeast Asia, and Africa. These regions are urbanizing and industrializing fast.

Their demand for energy will likely offset the savings from EVs in the West for at least another decade.

The average Nigerian or Indian uses a fraction of the energy an American does; as they climb the economic ladder, they will want air conditioning, cars, and travel. That energy has to come from somewhere.

Conclusion: The Ghost in the Machine

Here is the bottom line.

We live in a world that is desperately trying to break up with oil. We know it’s bad for the planet. We know it funds dictators.

We know it makes our economy volatile.

But breakups are hard. We are still living in the house oil built. Our entire modern way of life—cheap food, global travel, plastic surgery, fast fashion—is subsidized by the immense energy density found in crude oil.

For you, the reader, the takeaway is this: Don’t just watch the stock market. Watch the Straits. Watch the pipelines.

Watch the tankers. The transition to green energy is happening, but the “Old World” of oil is still very much alive, and it has a strong grip on the steering wheel of global politics.

The next decade will be defined by the friction between the rising Green economy and the incumbent Black Gold economy. And friction, by definition, creates heat.

Stay curious, stay skeptical, and keep an eye on the pump.