The Organization of the Petroleum Exporting Countries or OPEC is one of the most famous organizations in the world. Currently, it consists of 14 of the major oil-exporting countries. It is a permanent intergovernmental organization created by five founding members in 1960.
Iran, Venezuela, Iraq, Kuwait, and Saudi Arabia are the countries that created OPEC more than 50 years ago. The headquarters of OPEC are in Vienna, which is the capital city of Austria. The Secretariat which is the executive organ of OPEC is responsible for daily operations.
OPEC has several main objectives. One of the most important objectives is to guarantee fair and stable prices. The organization is coordinating petroleum policies among member countries.
Another objective is to deal with issues connected with the regular and economical supply of petroleum. Also, the organization helps investors who invested in the industry to receive their share of income.
As mentioned above, the history of OPEC dates back to the early 1960s. At that time, thanks to decolonization many former colonies gained independence. OPEC came to existence; it was a transitional time due to the new reality.
In 1965, OPEC developed its collective vision and established its Secretariat first in Geneva, Switzerland, before moving to Austria. Three years later, OPEC adopted a “Declaratory Statement of Petroleum Policy in Member Countries.” It was an important moment in the history of this organization. By adopting this document, OPEC underlined the inalienable right of all countries to exercise sovereignty over their natural resources.
In 1969, the number of member states increased to ten countries.
OPEC became famous around the world by the 1970s, when its members took control of their domestic petroleum industries. As a result, these countries conquered the oil industry, and they played an important role when it came to crude oil prices.
In the 1970s, more precisely, in 1973 the Arab oil embargo changed the oil industry. During this period, prices increased as Arab countries placed an embargo on oil exports.
Another event that shaped the history of OPEC is the Iranian Revolution in 1979 and subsequent events which accompanied the revolution.
The First Summit of Heads of State and Government in Algiers in Algeria took place in 1975. OPEC made the decision to broaden its mandate to help the poorer countries. Moreover, the same year the number of member states from 10 to 13.
In 1976, OPEC established a Fund for International Development.
OPEC helped to stabilize the oil industry in the 1990s during the first Gulf War as well as other conflicts. As a result, prices increased less dramatically than in the 1970s and 1980s. Overall, the decade was dominated by excessive volatility and general price weakness.
At the beginning of the 21st century, an innovative OPEC oil price band mechanism helped to stabilize crude prices. In mid-2008, prices reached record levels. However, the global financial crisis had a negative impact on oil prices.
During the first half of this decade, political unrest in many parts of the world affected both supply and demand. Currently, one of the biggest challenges for the OPEC and oil industry, in general, is climate change and regulations to deal with these problems.