This paper explores the interaction between market power and the energy transition in the global upstream oil industry. To align with the Paris Agreement’s global warming target, a significant portion of world oil reserves needs to remain untapped. At the same time, the OPEC cartel in the global crude oil market exercises market power by strategically slowing down production to inflate prices. Using detailed micro-level data on global oil production, costs and reserves, I build and estimate a dynamic structural model of global oil production in a cartel-fringe setting. The model captures the trade-off faced by the cartel between exercising market power by slowing production and avoiding future devaluation of oil by accelerating production. My findings reveal that (i) OPEC exerted market power during the 1990 - 2019 period, although the cartel only partly exploited the full potential gains; (ii) increasing carbon taxes can accelerate production and emissions—a green paradox—causing a reallocation of production under imperfect competition; (iii) well-designed carbon taxes can significantly erode market power incentives.