OPEC (Brief History) - Energy Education

Introduction to OPEC

• Founded in: Baghdad, Iraq, September 10-14, 1960.
• Founding Members: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela.
• Purpose: Stabilize the global oil market, coordinate energy policies, ensure fair pricing of exported oil and steady supply.

The Early Years

• 1950s: Soviet Union increased oil output, challenging The Seven Sisters (largest oil companies: Esso, Mobil, Standard, Gulf, Texaco, BP, CFP).
• Price Cuts: Arab countries sought to stabilize prices and profitability of oil.
• 1960s Challenges: Internal coordination issues, export limits disagreements, political divides (e.g., Six-Day War, 1967).
• Key Document: 1968 Declaratory Statement of Petroleum Policy - sovereignty over natural resources.
• Expansion Members by 1969: Qatar, Indonesia, Libya, UAE, Algeria.
• Market Challenges: New oil sources discovered (Nigeria, Alaska, North Sea).

The 1970s

• Market Share: Increased to 56% by 1973.
• 1973 Yom-Kippur War: U.S. support for Israel led to OPEC embargo (U.S., Canada, UK, Japan, Netherlands).
• Impact: Shortage, high prices, shift in global power dynamics.
• Market Influence: Not a monopoly; faced coordination challenges.

The 1980s

• Scarcity Fears: Led to energy alternatives (coal, nuclear, natural gas).
• Iran-Iraq War (1980-1988): Production disruptions, OPEC filled gaps.
• New Oil Discoveries: Lessened OPEC's market control (Gulf of Mexico, North Sea, etc.).
• Price Strategy: Quotas imposed (17.5 million barrels/day), internal production disagreements led to price fluctuations.

1990 to Present

• Post-Iran-Iraq War Instability: Political instability, USSR collapse, Iraq's invasion of Kuwait (1990).
• Membership Changes: Ecuador and Gabon temporarily suspended memberships.
• Recent Conflicts: Iraq, Libya, Nigeria affecting supply.

Current OPEC Members and Proven Reserves

• Major Members and Reserves:
  • Saudi Arabia: 268.3 billion barrels
  • Venezuela: 298.4 billion barrels
  • Iran, Iraq, UAE, Kuwait with significant reserves.
• Recent Members: Angola, Ecuador, Gabon.

Additional Information

• See Also: OPEC oil production and reserves, concepts like collusion and oligopoly.

References

• Various scholarly and online resources cited throughout the history of OPEC.