Once upon a time there were four American oil companies that controlled the world of oil. Their names were Exxon, Mobil, Chevron and Texaco. The world of oil then was focused. These four found the oil, pumped it and set its price to the world. Much of the oil these companies pumped came from Saudi Arabia. They owned it under a joint company called Aramco.

But in the past 40 years, the world of oil has been turned upside down. The rules have changed. The most important of these changes is that American oil companies are not any longer what we used to call “Big Oil”.

Now, Aramco is the national oil company of Saudi Arabia. It belongs wholly to the Saudi government and is run by Saudis. Similarly in Iran, Libya, Venezuela, Kuwait, Qatar, Mexico and many other countries, which are major oil producers, oil belongs to their national oil companies.

“Big Oil” as the multi-national oil companies are known, can rent it, contract for it, but cannot own it. Instead, they have to compete to get it. The price of oil is set by producers. These producers are mostly represented by the Organisation of Petroleum Exporting Countries, OPEC.

Also, “Big Oil” no longer consists of exclusively American oil companies. Among the 10 largest oil companies of the world are many European companies, including French behemoth Total-Elf-Fina; Shell, the Dutch-British company; AGIP, the giant Italian oil company; Statoil, the Norwegian oil company and, of course, the new big boys on the block from Russia: Lukoil and Yukos.

So oil producers, particularly in the Gulf where two thirds of the world’s oil reserves are located, have a choice. Are these producers playing their cards right?

The other big change is that America is no longer the most important client in need of oil. The new giant consumer of oil is China – a superpower in economy and the fastest growing consumer market on earth, with more than a billion people. There is India, an equally growing giant consumer.

In fact, statistics show that 90 per cent of the oil from the Gulf region, which includes Saudi Arabia, Iran, Kuwait, Qatar, the UAE, among others, is going to Asia, not America. I believe this century will be the scene of a whole new generation of oil wars.

It may be worthwhile for both the Arabs and Iranians, who together possess two thirds of the world’s proven oil reserves, to take advantage of this new international power line-up. Make friends with China and India. Oil is power.

Arab and Iranians must understand that America needs them a lot more than they need America. They are, for the first time in decades, in a position to change the rules of the oil game. For one thing, they can demand that the price of oil be set in euros instead of American dollars.

Oil producers are losing money on the dollar, because the dollar has lost more than 40 per cent of its value against the euro in the past two years.

Another thing Arab and Iranian oil producers should do is change their pattern of trade. Instead of buying goods from America – Boeing aircraft for example – buy Airbus from the European Union.

Make new friends through trade, take all your eggs out of the American basket, and then use them to put pressure on America, instead of having America put pressure on you. Oil is such a strategic commodity – you can play its importance to your advantage.

America invaded Iraq for oil. It has failed, as we see everyday, to control Iraq, let alone pump oil out of it. There is a lesson here to be learnt about the “limits” of American power.

It is equally important to appreciate the importance of the rising Chinese giant to the Gulf region. Points to remember about China are that it is: A major nuclear power; a permanent member of the Security Council; a super economic and political power that can stare America straight in the eyes, without blinking.

Finally, China is a country with thousands of years of civilisation. It is as wise as it is strong. Strategic Arab planners must start establishing long lasting trade and industrial ties with China.

Youssef F. Ibrahim is Managing Director of the Dubai-based Strategic Energy Investment Group. Before his current position, he served as senior Middle East correspondent for the New York Times and Energy Editor of the Wall Street Journal for 26 years, and was a senior fellow at the Council on Foreign Relations in New York