Recent scholarship on resource politics has found that the "resource curse" is largely specific to the Persian Gulf states in which British oil interests ensured the survival of small states. However, this does not present the entire picture of the relationship between oil and sovereignty. I argue that oil was also involved in the process in which the region protected by colonial powers was divided into certain states out of many possible territorial arrangements, creating states that would otherwise not exist. Based on extensive archival research, I show that when nine Gulf sheikhdoms negotiated under Abu Dhabi's initiative to create a federation, (1) oil production during the colonial period and (2) the protectorate system led Qatar and Bahrain to reject it and achieve sovereignty separately