Oil crisis lessons from Iran to Kuwait

Summary

Podcast Summary: Business Daily – "Oil crisis lessons from Iran to Kuwait"

Host: Rahul Tandon (BBC World Service)
Guests:

• Lord John Brown (former CEO, BP)
• Sarah Emerson (Founder & President, ECAI Energy)
• Greg Newman (Co-Founder, Onyx Capital Group)
  Air date: March 19, 2026

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Overview

This episode confronts the world’s recurring oil crises—past and present—amid a new energy price spike caused by conflict in the Middle East. Host Rahul Tandon investigates what lessons can be learned from prior oil shocks, particularly those linked to conflicts from the Suez Crisis to the invasion of Kuwait, and explores the persistent global reliance on oil with insights from energy experts, oil traders, and veteran industry leaders.

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Key Discussion Points & Insights

1. Historic Dependence and Repeated Oil Crises

• Oil as the Lifeblood of Growth

  • Sarah Emerson explains that oil became the primary driver of economic expansion post-World War II due to its transportability and cost advantages:

    “After World War II, we had tremendous economic recovery and growth...oil was the primary fuel because it’s very easy to move a liquid.”
    (Sarah Emerson, 03:35)

• Major Crises in Perspective

  • The episode highlights three major epochs of oil shock:
    1. Pre-1980/1970s Oil Embargo: Wake-up call for dependency on Middle Eastern oil.
    2. 1990s – Early 2000s Gulf Crises: Iraq's invasion of Kuwait and subsequent wars, with low US production and low Chinese demand.
    3. Post-2003: US becomes a net exporter; Chinese demand rises then levels off, reshaping the global dynamic.
  • Notable quote:

    “You can almost bundle [oil shocks] into three time periods...US and China far more relevant in these last two crises.”
    (Sarah Emerson, 05:40)

2. Geopolitics, Supply Disruption, and Market Adaptation

• Changing Nature of Crisis Response
  • Earlier crises often saw Saudi Arabia and Gulf producers increase output to balance lost supply, while the current crisis is characterized by deliberate production cuts and shipping blockades, limiting such relief.

    “You’re not getting the Saudi additional...they’re not adding production, they're taking production off. So there’s no one to sort of step in.”
    (Sarah Emerson, 07:08)

3. Life Inside the Oil Market During Crisis

• Trader’s Perspective ([08:43]–[09:45])

  • Greg Newman describes the unparalleled market volatility, with daily shifts formerly seen only annually, and the emotional toll on traders:

    “It was absolutely manic. We’re talking about annual moves in a day and back again...it’s incredibly stressful, particularly when the moves start at 10pm on a Sunday night...”
    (Greg Newman, 08:43)

  • Oil trading remains a relationship-driven, voice-based market, requiring global connectivity:

    “A lot of that trading has to be done with brokers and in dark pools...there’s a lot of voice element to it.”
    (Greg Newman, 09:27)

4. The Oil Company Leader’s Dilemma in Crisis

• BP’s Experience of the 1990 Kuwait Crisis ([12:01]–[17:36])

  • Lord John Brown outlines three priorities during oil shocks: safety of personnel, plant, and customers.

    “The most important decision is the safety of people, and the second one is safety of plant...thirdly, it’s the safety of customers.”
    (Lord John Brown, 12:01)

  • Despite surges in oil price (e.g., 1990: $17 to $36/barrel), companies focus on continuity, not profiteering:

    “You actually keep your own supply chain going...there is a windfall, but...windfalls, they come and they go.”
    (Lord John Brown, 13:17)

  • Spare Capacity Constraints

    • Most private firms are mandated to produce at maximum sustainable rates; real spare capacity lies mostly with state-run OPEC producers:

      “There’s very little spare capacity. The spare capacity actually is in the hands of state producers...”
      (Lord John Brown, 14:32)

  • How Oil Prices Are Set

    • During crises, prices are driven by market pressures as buyers scramble for refinery feedstock. National and commercial stocks can help, but scale, location, and oil grade mismatches complicate this safeguard. Increased energy costs ripple to consumers, especially in transport and electricity.

      “The market really is [what sets prices]...Individuals will have, with a lag, have to pay higher prices...These are not things to be taken lightly, and they happen very, very easily.”
      (Lord John Brown, 15:24)

  • Solution: Diversification

    • Lord Brown underscores the need for a broader energy mix to withstand shocks:

      “We have to have as many energy sources as possible so that when something goes wrong, we can rely on another source...”
      (Lord John Brown, 16:44)

5. The Pace and Obstacles of Transition

• Sluggish Global Shift Away from Oil

  • Rahul Tandon highlights that oil, while providing 30% of global energy today (down from 40% in the 1970s), remains dominant; the transition is incremental.

    “This transition...takes a lot of time. This is not something that you can do quickly...we’re not talking about five years.”
    (Sarah Emerson, 17:47)

• Decades to Diminish Reliance

  • Emerson projects serious oil reliance well past 2050, with complete independence unlikely soon:

    “I would say we’re somewhere north of 20 years...We’ll be beginning to sort of see that the reliance on oil is diminishing. But will it be fully diminished? No.”
    (Sarah Emerson, 18:02–18:18)

  • The likelihood of future oil crises remains high as long as this reliance persists:

    “You always have [crises] as long as we’re consuming this much oil globally.”
    (Sarah Emerson, 18:53)

---

Notable Quotes & Memorable Moments

• Lord John Brown, on critical company priorities during a crisis:

  “The most important decision is the safety of people, and the second one is safety of plant. Will this spread, for example, to other places? And then thirdly, it’s the safety of customers.” (12:01)

• Sarah Emerson, on crisis management:

  “After every crisis, the biggest response was oil production going up in other countries...This crisis is very different.” (07:08)

• Greg Newman, on life as a trader during extreme volatility:

  “It was absolutely manic...that was the most volatile day we've ever seen.” (08:43)

• On the slow pace of energy transition:

  “We’re not talking about five years...I would say we’re somewhere north of 20 years.” (17:47, 18:02)

---

Timestamps of Important Segments

• 00:45–01:39 – Framing the current energy crisis and historical context
• 03:35–04:39 – When and why the world became dependent on oil (Sarah Emerson)
• 05:40–07:08 – Three eras of oil shock and shifting global relevance (Sarah Emerson)
• 08:43–09:45 – Life in oil markets during crisis (Greg Newman)
• 12:01–15:09 – Oil company response and price setting during crises (Lord John Brown)
• 16:44–17:36 – Diversification as the enduring cure (Lord John Brown)
• 17:47–18:53 – Timescale and future of the energy transition (Sarah Emerson)

---

Conclusion

The episode underscores that while much has been learned from past oil crises—from stockpiling to diversification—global reliance on oil persists and makes the world vulnerable to fresh shocks whenever geopolitical turmoil disrupts supply. Recent market volatility outpaces historical precedents, and while the transition toward alternative energy is underway, it will take decades. As such, future crises are expected, and the imperative remains: diversify, prepare, and don’t underestimate the world’s abiding need for oil.

Transcript

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[Rahul Tandon]

Today's episode is sponsored by Smart Travel, a podcast from NerdWallet. You know that one friend who always finds the best travel deals, picks the right credit cards and somehow ends up in first class for the price of coach? Smart Travel is like that friend, but in podcast form. NerdWallet's travel journalists sort out what's worth paying for. From lounge access to travel advisors to hotel loyalty programs, make your travel dollars work harder. Follow Smart Travel on your favorite podcast app. Hello, you're listening to Business Daily on the BBC World Service. I'm Rahul Tandon. Today, as the world faces yet another energy crisis, we're asking what can we learn from previous ones? And we'll hear from the former head of one of the world's biggest oil companies on the challenges that BP faced. When Saddam Hussein invaded Kuwait.

[Lord John Brown]

People were very concerned about exactly where supplies were going to come from, how much would have to come out of stock, and how do you manage that to make sure that you could keep things going?

[Rahul Tandon]

And as many of us are now facing rising prices at the pumps, we'll look at how reliant we've become on oil and how quickly we could move away from it.

[Sarah Emerson]

Well, this transition that you're talking about takes a lot of time. This is not something that you can do quickly. We're not talking about five years.

[Rahul Tandon]

That's all coming up in Business Daily from the BBC. Sounds there from the current conflict in the Middle east, which has led to a spike in global energy prices. It's not the first time that this has happened.

[Lord John Brown]

A critical oil shortage sweeps across Europe.

[Rahul Tandon]

Queues like this are common in Paris

[Lord John Brown]

as supplies of gasoline dwindle. Service stations still in operation get a

[Rahul Tandon]

big play from famished motorcycles from the suez crisis. In 1956, the United States, Britain and the EU clamped down on importing Russia's oil. And to the start of the war in Ukraine. The global economy has faced shocks because of surging energy prices during times of conflict. Much of this has to do with oil and our dependence on it. Let's give you some figures on that. Oil currently remains the leading source of global energy, providing about 30% of total energy supply. It is coming down. That figure was 40% in the 1970s. But the transition, well, it's slow. So when did the world first start becoming reliant on oil? Sarah Emerson is the founder and president of ECAI Energy, a consulting firm based in Boston.

[Sarah Emerson]

Oil has been a key fuel for well over a century. However, I think after World War II, we had tremendous economic recovery and growth. And I think at that time, oil was the primary fuel because it's very easy to move a liquid. You can move liquids between markets. The economics of that are relatively low cost compared to something like natural gas, which needs pipelines and electricity, which needs wires. So it became sort of the engine of growth. And that's why the 1970s oil disruptions or oil crises were so important, because it really changed the thinking about oil.

[Rahul Tandon]

Do you think? And we saw it in the 70s with the oil embargo, didn't we, from some of the Arab countries following the conflict with Israel. That also. That is the point where, and that is so relevant today, as Iran's trying to disrupt the oil market globally, that countries began to realize the importance they had over the control of that supply.

[Sarah Emerson]

You're right. Oil was a critical fuel up into the 70s. And what we learned during the 70s is that a significant portion was coming from one region with potential geopolitical conflict. And so we did a lot of things. We diversified out of oil for power generation. We created the International Energy Agency. We created emergency measures, such as the Strategic Petroleum Reserve, demand restraint measures. We did a lot after the 70s or as a result of the 70s.

[Rahul Tandon]

When you look and we're talking about the Middle east here, aren't we, in terms of the region that has been most affected geopolitically, which has led to a huge impact on energy. Is there a time period, Is there a difference between the conflicts? Up to one period of time. Because we've had the Gulf War, the invasion of Kuwait, the embargo, you know, following the war with Israel. When you look at that history, is there moments where it seems different?

[Sarah Emerson]

Yeah, I think you can almost bundle them into three time periods. There's the period before 1980. During these 1970 crises, which were kind of the wake up call, and the OECD countries in particular did a lot to reduce reliance on the region. Then you have the period sort of from the 90s through the early 2000s where you really have two crises. You have the Iraq invasion of Kuwait and the US Invasion of Iraq. That's almost its own sort of special period. And the reason I say that is because at that time, US Production was still quite low and Chinese demand was still quite low. And if you then shift to the third period, really since 2003, really the mid 2000s on, a lot of things have changed, but two of the biggest changes have been that the United States is now a significant net exporter of crude and products. And Chinese demand has grown tremendously, although I would say now it's tapering off. So that's just made the US And China far more relevant in these last two crises.

[Rahul Tandon]

We've had a more recent crisis that many people will remember before what we're seeing at the moment, which is Ukraine and the impact that that had on global energy supplies. But because of what you've said there, does it mean that when we're seeing these shocks now, they can be more in some areas than in others? Europe is much more vulnerable?

[Sarah Emerson]

Well, it's interesting you ask that. I think there's a. Let's start with the biggest change, and this is really looking at every single crisis, and that is in 79 and 90 and 2003. And even in 2022, the big response to the crisis was that oil production went up in other countries, most notably Saudi Arabia. Saudi Arabia in the case of 2022 and some of the other UAE, Iraq, Kuwait production went up. And as a result, the impact of the loss of Russian crude was offset fairly easily. This crisis is very different because you're shutting down the strait. And so you're not getting the Saudi additional, either Saudi or UAE or any of the other Gulf producers, they're not adding production, they're taking production off. So there's no one to sort of step in and off. And we had that Happen Certainly in 902003 and 2022.

[Rahul Tandon]

That volatility in the price of oil because of the conflicts that Sarah was talking about there means that life is busy at these times for oil traders and for companies that are in the energy business. And that's what we want to focus on now. So let's start with an oil trader. We wanted to give you an insight into what their lives are currently like so here's Greg Newman, who co founded Onyx Capital Group, which describes itself as the world's leading market maker in oil derivative contracts.

[Greg Newman]

To begin with, it was absolutely manic. We're talking about annual moves in a day and back again in the same day. And that was the most volatile day we've ever seen. And I think in particular last week there was a consensus, I think forming that this is going to be a long and sustained crisis. So things have gotten a bit easier to trade. But having said that, it's very much at breaking point. Still, from a pricing point of view, it's incredibly stressful, particularly when the moves start at 10pm on a Sunday night and you've got to trade throughout the night. This is a market that has many, many more contracts than you see in the news. And a lot of that trading has to be done with brokers and in dark pools of liquidity as we call it, which essentially means you gotta be speaking to people directly. Clients, broker network, like I say, and the normal kind of screen side of things which people usually think of. When I think of financial markets, it's not really like that in oil. Still, there's a lot of voice element to it. So you've got to be well connected and have coverage across the world.

[Rahul Tandon]

Oil trader Greg Newman there. You're listening to Business daily on the BBC World Service.

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[Rahul Tandon]

I'm Rahul Tanden, and today we're asking what can be learned from previous conflicts around the world about the global reliance on oil? Cast your minds back now to 1990. Iraq's invasion of Kuwait is condemned around the world.

[Lord John Brown]

The United nations says, withdraw your troops. But tonight, Iraq's control appears to be almost complete.

[Rahul Tandon]

That was one of the shocks that Sarah Emerson talked about earlier, Iraq's invasion of Kuwait. We heard from Greg Newman, an oil trader. So how do you run a company at times like this? Lord John Brown was a senior executive at one of the world's largest oil companies, bp, when that happened. He later went on to run it and was in charge during the second Gulf War, which started in 2003.

[Lord John Brown]

Well, the most important decision is the safety of people, and the second one is safety of plant. Will this spread, for example, to other places? And then thirdly, it's the safety of customers. You know, is it going to affect the supplies we have which go to our refineries, go to our customers? If so, what do we do about it? So you can see that today, where this is the largest supply interruption that I've known in the history of the oil and gas industry. So people were very concerned, I'm sure, about exactly where supplies were going to come from, how much would have to come out of stock, whether stocks were either commercial or governmental. And how do you manage that to make sure that you could keep things

[Rahul Tandon]

going during that period in 1990, we saw, didn't we, from July to October, a significant increase in the price of oil. It went from $17 a barrel up to $36 per barrel, and even at some points went higher than that. So you, as an oil company, in that moment, as the price is going up, are you thinking this might actually be quite good for us? Do you try and increase your supplies? Do you sell more of the stock that you're holding?

[Lord John Brown]

No, you actually keep your own supply chain going. I think that's really quite important. And yes, indeed, there is a windfall, but I think, again, everybody looks at a windfall. Certainly if you've been in the oil business for any time at all, you know, windfalls, they come and they go. The world had a pretty good supply of oil. In fact, over that period, from the late 80s, really to 2003 or 4, the world was oversupplied with oil. And it was only when demand rose dramatically in China in the decade of the 2000s, did the price start going up because there was greater demand for the oil and much of oil which was in inventory was being demanded by China.

[Rahul Tandon]

If you're looking at the situation now because you're somebody who's been there, haven't you, during the Iraq war in 2003, during the Kuwait crisis in 1990. If you have a part of the world which has been badly affected, the Middle east, and you are a company that has oil in different parts of the world, can you quickly increase production elsewhere?

[Lord John Brown]

Very rarely. There's a limited amount. And most places where oil and gas companies operate, they're required to produce oil at a rate which is so called maximum economic rate. So as much as possible without damaging reservoirs. And governments keep you honest to that promise. So there's very little spare capacity. The spare capacity actually is in the hands of state producers who withhold capacity if they're a member of OPEC in order to balance supply and demand in the world and helps keep the price in a certain level.

[Rahul Tandon]

A lot of people at home listening to this are worried about the travel of oil prices, how high they may go, but they don't understand how those prices are set. So during a time of conflict, who sets those prices then?

[Lord John Brown]

Well, it is to sound very dull. The market really is. When there's a conflict, what happens is first people are worried about where they can fill up their refineries, can they get refined product, how do they keep their business going? And there are two sources of that. One is what you can buy on the market. It's the only source, actually. And then the second is what comes on the market. Now, there are two things that can add to the market in significant scale, but only after a period of time. One is the commercial stocks that everyone holds inventory. It's about 61 days, 62 days of world demand is kept in that. And secondly, there are governmental stocks. We know how much those are in different countries. We're not quite sure how much China has, but we know that China has a lot in stock. So a combination of these two things start flowing into the market. Sometimes it's in the wrong place, sometimes it's the wrong grade of oil. People, I think, don't appreciate that oil comes in many different grades and you need the right one to go to different refineries. So all of that has to happen. And as a result, the price does, as we've seen over the last few days, go up and come down a bit, then go up a bit. Individuals will have, with a lag, have to pay higher prices for petroleum products. So Petrol and so forth. Gasoline travel will become more expensive. And when it comes to natural gas, the price of electricity will go up as well. So these are not things to be taken lightly, and they happen very, very easily. What's the cure for all this? It's always been on the table. We have to have as many energy sources as possible so that when something goes wrong, we can rely on another source, whether it's another geography or actually another physical source like renewables or geothermal or nuclear or something to take the slack while these problems arise.

[Rahul Tandon]

Lord Brown, there on the world's over reliance on oil. So how long will it be before we move away from it? Let's get some final thoughts from Sarah Emerson.

[Sarah Emerson]

Well, this transition that you're talking about takes a lot of time. This is not something that you can do quickly. So to answer your question, I don't know what year this would be, but we're not talking about five years.

[Rahul Tandon]

What are we talking, 50 years, 100 years?

[Sarah Emerson]

I would say we're somewhere north of 20 years.

[Rahul Tandon]

But it could be more than that. Couldn't.

[Sarah Emerson]

Could be. Well, see, it's a question of degree of reliance. So we'll get to a point where we'll sort of, I think in, you know, by 2050 or so, we'll be beginning to sort of see that the reliance on oil is diminishing. But will it be fully diminished? No. Let's say that a country that currently is very dependent on oil suddenly is able to develop, you know, renewables and more nuclear and potentially even more gas, although gas has some of the same issues. Then they will be living in a world where they're much less dependent on this one region and this one fuel.

[Rahul Tandon]

But the likelihood is I'll be calling you up again in the next few years and we could make the same program again about another energy crisis because of geopolitical circumstances.

[Sarah Emerson]

Yeah, but I think you always have that as long as we're consuming this

[Rahul Tandon]

much oil globally, let's hope that we don't have to call it too soon. But as long as the global economy remains reliant on oil, in spite of the lessons that we've learned from similar crises in the past, we will all need to be prepared for more shocks to the world's oil market. That is it for today's edition of Business Daily. The producer was Rebecca Smiley. To hear more episodes, just search for Business Daily wherever you get your BBC podcasts, and you can get in touch with the team. Our email address is businessdailybc.co.uk. thank you as always for listening.

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