This article deals with the evolution of the international petroleum sector since 1973 with a special view to interdependence between the economic and political factors that influence it. Two issues arefocused upon: (1) the effects of the nationalization of oil companies on the sharing of oil rents and on changes in the structure of the oil market; and (2) the determination of oil prices. The latter involves a discussion of, on the one hand, the political and economic behaviour of the United States and Saudi Arabia and, on the othr:r, the combination of cooperation and conflict that hilS tended to characterize relations among OPEC countries. Carhele presente une synthese et une tentative d' explication de l'evolution du secteurpetrolier international depuis 1973 en tenant compte du phenomene de l'interdependance entre les facteurs economiques et les factwrs politiques. Deux points sont priviIegies. Le premier est l' examen des effets des nationalisations (facteur institutionnel) sur la partage de la rente pitroliereet les modifications des structures du marche. Le deuxieme point met l'accent, d'une part, sur les comportements economiques et politiques des Etats-Unis et de l'Arabie-Saoudite, et d'autre part, sur Ie "conflit- cooperation" entre les pays et l'OPEP, pour expliquer la determination et revolution des prix. Antoine Ayoub 'is Professor of Economics at Universite Laval in Quebec and Visiting Professor at Universite Pantheon-Assas, Paris II. This paper is based on notes from a seminar given by him when he was awarded the College de France Medat June 4,1991. Oil: Economics and Politics ANTOINE AYOUB 1. Introduction Until the Gulf crisis of 1990-91, many were arguing that oil had lost its strategic role, that it had become an ordinary commodity governed by the standard laws of the market, and that the market would peacefully solve any conflict within OPEC or between OPEC and the oil- buying countries. "Desert Storm" blew down those convictions by demonstrating, if it was still necessary, the strategic and vital role of oil. Furthermore, it indicated again the interdepen- dence between economics and politics in ev- erything concerning oil. Such interdependence may appear as evident to anyone involved in oil management in either the public or private sectors. It is not the case, however, for economists at universities who have studied the market structures and price mechan- isms involved. For them, the oil market has been another area in which to apply standard formal economic analYSis, without taking into account the role of politics. The results of these exercises have often appeared to be in a vacuum, far from the real world. Indeed, 20 years after the oil shock of 1973, the academic literature is abundant but inconclus- ive. 1 Despite the great sophistication of the models describing the behaviour of OPEC and 1/ See, among others, the surveys by Griffin and Teece (1982), Gately (1984 and 1986), Barbet (1983), and Ayoub and Percebois (1987). Energy Studies Review Vol. 6, No.1, 1994 Printed in Canada 47