This paper explores the emergence of the “oil economy” as a field of knowledge under which the “question” of labor was “managed” in the oil producing states of the Gulf, particularly in Bahrain. Its particular focus is the historic anxieties that States and Oil corporations in the Gulf have had about labor movements. I argue that these anxieties were the direct result of labor unrest in Bahrain and throughout the Gulf during 1950s and 60s. This is also why the study of the Gulf has since then been conducted through the notion of “political risk.” This paper historicizes this form of knowledge as part of the emergence of a broader category, that of the “oil economy” through which governments and corporations continue to separate labor from questions of popular sovereignty, representation, and rights. Using a variety of sources from colonial, corporate, and local archives in Bahrain, I explore this historic alliance of regimes and oil firms that came out of the experience of nationalist and labor agitation at mid-century. The period in which workers were de-unionized, re-trained, and “rationalized” after the unrest of the 1950s and 60s forms the historical element of the paper. Critically, I argue that the disciplinary and administrative capabilities of the multinational oil corporation was formative to the emergence of the State capabilities in the 60s, as a formal process of “rationalization” was completed before it was “safe” to grant the new Gulf States their “independence” in the 1970s. The paper is part of a broader dissertation that aims to analytically and historically connect the social history of labor to oil, the state, and the oil firm at the productive core of the transnational oil industry.