Oil prices have fallen dramatically since the summer. Having peaked at $145 a barrel in July, they fell this week below $70. More than half of the decline has taken place in the past three weeks, as market prices began to reflect the likelihood and imminence of global recession.

Such huge shifts have economic and diplomatic implications. First, they depress the revenues of nations that have used oil wealth to assert independence from the foreign policy aims of the Western alliance. Secondly, they raise the question of the role of the Organisation of the Petroleum Exporting Countries (Opec) in an unstable global economy. And thirdly, consumers will reasonably wonder whether declines in the oil prices will be reflected accurately in prices on the garage forecourt.

Oil prices have been driven for the past decade by rapid, energy-intensive growth in China. That demand has generated substantial gains for the “axis of diesel”: Russia, Iran and Venezuela. The enhanced diplomatic strength of these countries has taken various forms.

This summer Russia launched an aggressive incursion into Georgia. It was intended ostensibly to support the separatist campaigns of breakaway regions, but was more a means of intimidating Russia's “near-abroad” neighbours and thwarting their ambitions to join Nato.

Iran's nuclear adventurism has been strengthened by the state of its oil revenues. Military action by the United States or Israel remains an option of immense risk and unknown prospects of success. But the effectiveness of economic sanctions has been much reduced by the state of the oil market. Iran's economy has been supported by global demand for oil; Western leverage has been undercut.

Venezuela's advantage has been of regional rather than global significance. It has enjoyed rapid export-led growth since 2003 and around 90 per cent of its exports are oil-related. Even with this boom, Hugo Chávez, its President, has created domestic shortages and boosted inflation. Revolutionary rhetoric and domestic mismanagement will have still greater costs as oil revenues decline.

Beyond these states, the role of Opec is uncertain. Opec has endeavoured to cut production in order to support the oil price, but in truth it is not a particularly effective cartel. Excepting the quadrupling of oil prices in 1973, Opec's members have often ignored production ceilings that were supposed to support prices.

Still, the West should encourage Opec's members to help to stabilise the global economy in its current parlous state. Usually when economic growth slows and demand for oil falls, lower energy costs help to support spending in oil-consuming nations. But the extraordinary recent volatility of oil prices poses a danger. Oil producers are unable to plan long-term projects in these circumstances. When growth at last resumes, oil supplies may not be able to keep pace - thereby stifling recovery at an early stage.

Finally, the price of petrol for ordinary consumers has yet to adjust properly. There is no excuse for oil companies to gouge the consumer. Doing so will only support irresponsible populist demands for windfall taxes on energy companies.

Oil and politics are inextricably intertwined. The world economy has depended in recent years on the recycling of savings to support American consumption. Sovereign wealth funds, derived mainly from oil and gas revenues, have been helpful for the Western economies, by injecting liquidity into the financial system when it has been threatened. The lesson that producers and consumers of oil should infer from the ructions in world markets is that we are in this together, and must get through it together.