This chapter assesses the problem of oil by integrating economic and political analyses. It considers the status of oil from Iraq and the Gulf and the problems posed by the fact that two thirds of the world's proved petroleum reserves are located in the Gulf region. The chapter also considers the status of Iraqi and Saudi oil during the Gulf crisis and the way in which the global oil system reacted to the crisis. An assessment of oil and power in the aftermath of the Gulf War provides evidence for concluding that the risks were in fact substantial and that avoidance of serious upheaval was by no means inevitable. Understanding the role of oil in international politics and international political economy has proved elusive. Too many observers approach the subject through perspectives that are narrowly economic or, conversely, mostly political. The most dramatic pattern is that of an oil shock, defined as a profound disruption of the existing supply and price system.