The Organization of Petroleum Exporting Countries (OPEC) is founded in 1960, at a conference in Baghdad . A year later, it approved its statutes in Caracas, Venezuela. The five founding members include Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela. OPEC celebrated 50 years of its existence in 2010. During this time, the number of members has more than doubled. Currently, is associating 14 oil-exporting countries. The organization (also called the cartel) controls about 70% of the world’s oil reserves. Overall, OPEC members account for one-third of all oil production. And almost half of the oil export volume.
The main goal of the organization is to coordinate the economic policies. Mainly from the member countries concerning fair conditions and stable prices for oil producers. Thanks to its strength, the cartel can set quotas on how much oil is extracted each year. This significantly affects the price of oil on the world market.
The establishment of the organization starts during a period of significant global economic and political changes. It was during the 60’s. And especially with protracted decolonization and the emergence of new states. OPEC set its collective goals and, in 1960, founded its headquarters in Geneva. Five years later, OPEC headquarters moved to Vienna, where it still operating until today.
- Algeria (1969)
- Angola (2007)
- Ecuador (2007)
- Iran (founding member)
- Iraq (founding member)
- Kuwait (founding member)
- Libya (1962)
- Nigeria (1971)
- Qatar (1961-2019)
- Saudi Arabia (Founding Member)
- United Arab Emirates (1967)
- Venezuela (Founding Member)
- Gabon (1975-1995, 2016 again)
- Republic of the Congo (2018)
- Equatorial Guinea (2017)
In the 1970s, the cartel showed its power after the Yom Kippur War. Then, Israel defeated a coalition of Arab states. OPEC took revenge by deliberately reducing oil production in the autumn of 1973. Also, by embargoing its exports to countries that supported Israel. Consequently, it was the most significant oil shock in history. Then, the price of raw material increased fourfold.
OPEC lost much of its influence and profits in the 1980s. Then, the United States, Mexico, Canada, and other countries, found new oil deposits. However, it remains the dominant player in the black gold market.
After the economic crisis, OPEC became the leading supporter of the oil industry. The second and third summits were in Caracas, during 2000, and 2007 in Riyadh. It presented a long-term strategy for sustainable development, stable energy markets concerning the environment.
The supreme body of the organization is the Conference of Representatives of the Member States. There, the government representatives meets with the ministers responsible for industry, energy and oil production. The Conference meets twice a year; all proposals and decisions are challenging to enforce because it works on the principle of unanimity.
The Conference also appoints a Governing Council. Each Member State gives a nomination for one Governor. They manage the organization, enforce Conference decisions, and decide on budgets. Another body is the General Secretariat. Its headed by the Secretary-General. Usually, it is an official representative of OPEC. Since 2007 it has been Abdullah El-Badri.
OPEC International Development Fund
In addition to profit-oriented, OPEC also seeks to help developing countries. In March 1975, the Fund for International Development was established in Algiers. Originally, it would be temporary, with a subsidy of $800 million. But, in only one year, it managed to double the deposit.
Fund resources come from voluntary contributions from the member countries of the organization. Similarly, from the income of the fund’s investments and loans. By the end of 1977, 71 loans had been granted to 58 developing countries. Over time, financial aid has spread to more than a hundred developing countries. Commonly, the most underdeveloped countries being preferred. By the end of 2004, the fund’s business expenses, including grants and contributions to other organizations, had been $7 billion.
The official OPEC site right here.