OPEC

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Ahmed Sayed Omar, head of the Kuwaiti delegation, speaks in Baghdad on September 14, 1960 during a meeting that led to the founding of OPEC.

The influence of the Organization of Petroleum Exporting Countries (OPEC) has closely, naturally followed the peaks and valleys of the world's demand for oil. September 14 marked the group's fiftieth anniversary — a half-century of existence characterized by embargo, conflict, and even war. OPEC was formed in Baghdad in 1960 when five of the world's top oil-producing countries — Iran, Iraq, Saudi Arabia, Kuwait and Venezuela — agreed to band together in order to try to exert more control over their destinies. By coordinating export policies and production levels, the group aimed to protect member nation interests and seize control of oil prices and revenues, which were previously set and reaped by Western companies. By 1973, seven more countries had joined OPEC and the group accounted for two-thirds of the world's oil production.

It was in the early part of that decade, when nationalization allowed many governments to take back control of their nation's natural resources from outside oil companies, that member countries experienced beneficial effects from the partnership. But that same period also brought two of the group's more notorious moments. The oil crisis of 1973 saw peak demand result in OPEC's drastic increase of prices. Around the same time, Arab OPEC countries became embroiled in a dispute with Israel, and eventually placed an embargo on the United States and the Netherlands (two of Israel's biggest supporters) during the Yom Kippur War. Though not all of OPEC's members participated the embargo it, together with the increase in prices, led to oil shortages in the U.S. and throughout Western Europe.

Conflict was not limited to OPEC versus the world. In 1980, the Iraq-Iran War broke out, pitting two member countries against one another for the first time ever. At the same time many countries that imported OPEC oil began to explore alternate energy sources such as coal, natural gas and nuclear power. The two together resulted in falling oil prices, and in 1982 OPEC set quotas to scale back production and avoid a glut on the market. While OPEC's goal has always been for its members to work together, such quotas have only served as a guideline — one which many countries have blatantly ignored. Only three of the thirteen countries kept from going over their 1982 quota and the decade was inundated with oil nonetheless. By 1986, revenues for all oil producers had fallen by an estimated two-thirds.

Throughout the following decade, oil prices remained mostly low, with a brief uptick due to the 1990 invasion of Kuwait by Iraq. Fear that the conflict would result in an oil shortage drove up demand and prices followed. Yet the increase was short-lived and oil prices remained generally low for the rest of the decade. The early 21st century brought the oil market to new heights as demand soared, particularly due to growth in Asia. OPEC members enjoyed the benefits of the boom, with prices rising to an all-time high. But as the old adage says, what goes up must come down. The 2008 economic crisis created a plunge in revenue, as prices fell by roughly 80%. Though this time, OPEC proved to be more unified, as on December 18, 2008 they announced the largest production cut in history, which helped them weather the storm. By 2009, oil prices had substantially recovered.

Today, economists and analysts debate how influential a force OPEC is on markets. The current twelve member countries (Indonesia and Gabon have since departed) are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela, and collectively they own 79.6% of the world's proven oil reserves. The group continues to work together — some speculate in a more cohesive fashion than ever before — and are seemingly in the midst of comfortably coasting. Yet if history is any indication, another plunge or rise could be in the near future.