How oil geopolitics have changed from the times of Kissinger to now

“Don’t talk to me about barrels of oil. They might as well be bottles of Coca-Cola. I don’t understand.” One of the most eminent figures to pass away last year, Henry Kissinger, played down his own expertise in petroleum. Yet his actions shaped modern energy geopolitics.

Mr Kissinger, who died in November aged 100, carried out the “shuttle diplomacy” that ended the active hostilities between Egypt and Syria on one hand, and Israel on the other, during the war of October 1973 that began with President Anwar Sadat’s orders for a surprise attack across the Suez Canal.

He also negotiated the 1973 peace accords that ended US involvement in the Vietnam War – allowing Washington to abandon its ally in Saigon to defeat in 1975 without further pangs of conscience.

That ran concurrently with the famous moment of Nixon in China, when in February 1972, his boss, President Richard Nixon, met China’s leader Mao Zedong.

Less laudable were his roles in the secret bombing of Cambodia, leading to the Khmer Rouge’s genocide there, in the coup against Chile’s elected President Salvador Allende, and his indifference to the hundreds of thousands or more civilians killed in Bangladesh’s war of independence from West Pakistan.

The October War most obviously highlights Mr Kissinger’s centrality to modern oil. That was the occasion for his outburst to his aides about barrels of oil.

King Faisal of Saudi Arabia tried to warn Mr Nixon throughout 1973 that he would have to impose an oil boycott if Washington did not resolve the contradictions of its Middle East policy. Mr Kissinger and Mr Nixon did not heed him.

A group of Arab states responded to Washington’s airlift of arms to Israel with an embargo on oil sales and a sharp cut in production. Coming at a favourable time, when the market was tight, spare capacity almost non-existent, and US output in decline, the effect was seismic.

The US administration would have backed Israel even if they had understood their vulnerability to an oil shock. The Soviet Union’s Middle East clients were converted or neutered.

Yet the 1970s saw the West in “stagflation”: inflation, unemployment, malaise, the end of the postwar consensus on the mixed economy and heavily-regulated capitalism.

Mr Kissinger’s main contribution to a new energy security architecture was the formation of the International Energy Agency in November 1974, with its policies of shared strategic stocks.

Intended to counter Opec, the IEA has been through episodes of co-operation and dispute with its old sparring partner. It remains important today, though its mission has grown and metamorphosed, now focusing on a new adversary, climate change.