My paper examines the effects of oil wealth on the institutions that shape the national business environment and opportunities for domestic entrepreneurs. Using techniques in Bayesian statistics, I first find that countries who are dependent on oil and fuel-related exports tend to provide worse institutions for credit lending and market entry for entrepreneurs in industrial and commercial sectors. I develop a number of hypotheses to explain these empirical findings that look to the incentives of political elites to support institutional reform in areas beyond the resource sector and concerning non-elite business groups. I also examine the role of time horizons and argue that when political elites have longer time horizons due to enhanced political stability they are more likely to support reform of these institutions and make more efforts to foster entrepreneurship in society. I compare the cases of Iran and Saudi Arabia since the 1950s to show in greater detail how these state-business dynamics emerge and how divergent outcomes often emerge in oil states in regard to the institutions that guide entrepreneurs.