OPEC refers to the Organization of Petroleum Exporting Countries. It was originated in 1960 in Baghdad and at present is consistent of 11 countries, with headquarters in Vienna, the capital of Austria. The goal of formulating OPEC’s was to control the production of oil and to keep the oil prices at a reasonable rate. The members of OPEC usually meet once every two years and decide on the amount of production of oil by each country.
Before its origin, there were few major oil organizations that regulate the world’s oil production. Their aim was to sell the maximum amount of oil and prevented the governments from intervening in their decision making process. The main reason of forming OPEC was – some oil-rich countries, mainly in the Middle East, wanted to control the production of oil, as a result, Iran, Iraq, Saudi Arabia, Kuwait and Venezuela founded OPEC. After few years of forming OPEC, Indonesia, Nigeria, Qatar, Angola, Libya, Algeria, Ecuador, and the U.A.E. also joined.
Initially, OPEC did not have much authority and power. However, this changed later when the third Arab-Israeli war began. The United States and some European nations supported Israel and OPEC members, influenced by the Arab nations, restricted selling oil to the West. As a result, oil prices increased by ten times and OPEC nations became rich. The West dropped into deep recession because they needed OPEC countries oil.
In the aftermath of the oil crisis, western countries looked for other forms of oil in order to become a more independent nation. Due to this, oil prices dropped to the lowest rate in the history of energy, oil-rich countries faces a huge financial crisis and by the end of the 90s, their power weakened. The major reason of this financial crisis was conflicts and arguments and because countries could not agree on oil production shares. Some OPEC nations break the agreements and produced more oil, thus reducing prices.
After 2000, oil prices began to increase again and reached at the peak by the end of 2007. Since then, the oil prices have gone up and down many times.
Today, OPEC still regulated more than 60% of the world’s oil assets and makes almost 40% of the world’s oil. Saudi Arabia is the strongest member of the OPEC group, because it has the major oil reserves. Though, there have been internal arguments in the group in the past years, but it remains a most commanding organization.
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