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A petrostate, oil state or petrocracy is a polity whose economy is heavily dependent on the extraction and export of petroleum or natural gas. Petrostates are conventionally independent nations; however writers like Samuel Weston and Andrew Nikiforuk describes major oil-producing subnational entities like Wyoming, Alberta and Louisiana as also petrostates. A petromonarchy or oil monarchy is a petrostate run by a dynastic absolute monarch; one run by another type of autocrat is a petro-dictatorship.
The presence alone of large oil and gas industries does not define a petrostate: major oil producers that also have diversified economies are not classified as petrostates due to their ability to generate income from various industries and sectors beyond the oil industry. Petrostates typically have highly concentrated political and economic power, resting in the hands of an elite, as well as unaccountable political institutions that are susceptible to corruption.
Petrostates are typified by weak economies, where products are more frequently imported than domestically produced. Diversification can successfully occur in limited circumstances, such as Mexico becoming part of the North American Free Trade Agreement, or Dubai leveraging its location to become a hub of commerce and tourism. Most petrostates do not attempt economic diversification, instead seeking economic domination through large, state-owned oil companies.
In some petrostates, leaders and governments may become more Authoritarianism as they accumulate significant wealth and power through the control of the oil sector. They may use these resources to maintain political control, suppress opposition, and stifle democratic institutions. For example, Steven Fish identifies oil wealth as one of the major reasons for Russia's failed democratization. He explains that revenue from oil exports fueled corruption, and corruption, in turn, hampered Russia's political liberalization. Furthermore, he notes that United Kingdom's and Norway's resource wealth did not lead to authoritarianism because "sturdy democratic regimes" were already in place. Similarly, Michael Ross argues that “the case of Russia since 1998 illustrates how oil revenues can endanger a weak democracy by boosting the popularity of an elected incumbent, who gradually removes checks and balances on their own authority”.
In many petrostates, rulers invest in social welfare programs, including healthcare, education, and subsidies for essential goods. For example, Kuwait, Saudi Arabia, United Arab Emirates, and Qatar have invested in education, healthcare, and public amenities to improve the quality of life for their citizens.
from petrostates may also stabilise autocratic regimes in nations whose citizens provide cheap expatriate labour. These remittances can be captured as by governments otherwise extremely short of capital,See and allow the ruling elites of the labour-supplying countries cheaper consumer goods. Authoritarian petrostates are also known to be models of governance for right-wing populist rulers like Donald Trump, and for wealthy corporations seeking a system of rule without taxes or democracy.See
Petrostates, it has been argued, see increasing inequality with increasing wealth, because they do not depend upon the labour of their inhabitants but upon a tiny elite's luck in owning their valuable resources. It is also argued that they have no incentives to abide by rules regarding reduction of greenhouse gas emissions, and that consuming states have no ability to control the polluting petrostates.
Recent studies challenge the assumption that the transition to sustainable energy will lead to the decline of petrostates, suggesting that their future depends on production costs and social factors. Furthermore, the low-carbon transition might provide new export opportunities for petrostates as energy-intensive sectors in developed countries decrease, potentially leading some, particularly in the Middle East, to further specialize in high-carbon sectors.
Since the 2022 Russian invasion of Ukraine, Alexander Etkind has suggested that petrostates are engaging in wars because of the existential economic threat decarbonization poses to their rulers’ power and wealth. He also argues that petrostates pay absolutely nothing for the emissions and costs of climate change their oil creates abroad, nor for the emissions produced by burning oil at home. The corporate identity of state-owned oil and gas corporations has also helped insulate petrostates from requirements to restrict fossil fuel production and caused them to attempt to claim that continued fossil fuel production can be decoupled from greenhouse gas emissions. This is in spite of serious impacts of climate change in many extremely rich petrostates: they have tended to avoid playing the victim and to align with other, less affected major polluters even when severely threatened. Russia and other Central Asian petrostates also have begun in recent years to lead a powerful backlash against movements to decarbonise in the European Union.
The petrostate narrative often becomes intertwined with the national identity, notably in Russia and in Saudi Arabia. The story of an oil-rich nation can influence collective memory and national pride. Cultural narratives might emphasize self-reliance, economic strength, or the role of oil in nation-building.
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