Organization of Petroleum Exporting Countries is a cartel of 12 nations that’s seek to influence oil prices through control of supply oil to world markets. It initial members including Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Prior to the formation of OPEC and until the late 1950s, the international oil industry had been characterized mainly by the dominant position of the major concessions granted to the major oil-producing countries.
Attempts by the oil-producing countries at co-coordinating their pricing and output policies go back to the midp1940s, when the Arab League was formed.
OPEC was originally intended by two of its founder –Venezuela’s Juan Pablo Perez Alfonso and Saudi Arabia’s Abdullah Tariki – to play the same role on the international stage.
The official contacts between Venezuela and the Middle East took place in 1949 with a three mission from Venezuela touring the Middle East.
The second came ten years later in April 1959, during the First Arab Petroleum Congress, though apart from it and resulted in the so-called Mehdi Pact that was signed by representative of Iran, Kuwait, Saudi Arabia , the United Arab Republics, Venezuela and the head of the Arab League’s Petroleum Committee, an Iraqi.
In 1959 and 1960 there was the large reduction reductions in oil posted prices. The decrease in income per barrel thus came as a surprise and the first reduction of February 1959 raised a wave of pubic protest in the oil-exporting countries.
Despite the strong position taken by oil-exporting countries regarding any further reductions, the major companies went ahead and cut prices again in August 1960.
The exporting countries responded by founding OPEC one month later after this reduction.
The creation of OPEC represented a major turning point in the relationship between the producing countries on the one hand, and the oil companies and consuming countries on the other. It was the first attempt by the government of oil producing countries to organize themselves collectively.
It was another step in reducing foreign influence in the oil industry. As the 1990s, the oil-rich nations had achieved complete control over their oil.
The formation of OPEC
