OPEC Is Founded
The Organization of Petroleum Exporting Countries (OPEC) was founded during a conference in Baghdad, Iraq, that commenced on September 10, 1960. The initial members included Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, with subsequent additions of Qatar, Libya, Indonesia, the United Arab Emirates, Algeria, Nigeria, Ecuador, and Gabon in later years. OPEC's headquarters has been based in Vienna, Austria, since 1965. The organization's establishment was a response to the dominance of Western oil companies, which, with backing from the U.S. and Great Britain, controlled Middle Eastern oil resources while keeping prices low, thus limiting benefits to oil-producing nations. As global reliance on oil grew in the 1960s, OPEC member states nationalized their oil fields and began implementing production quotas and price increases to exert control over oil prices. This shift led to significant economic disruptions, particularly during the energy crisis of the 1970s, contributing to inflation and economic challenges in Western countries. An oil embargo against the U.S. during the Arab-Israeli War of 1973 further highlighted the geopolitical impact of OPEC's actions. Overall, OPEC's founding marked a pivotal moment in the global oil industry, reshaping the dynamics between oil-producing nations and consuming countries.
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OPEC Is Founded
OPEC Is Founded
The Organization of Petroleum Exporting Countries (OPEC), an international cartel of oil producing nations, was established during the Baghdad Conference held in Iraq beginning on September 10, 1960. The founding nations were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. They were later joined by Qatar in 1961, Libya and Indonesia in 1962, the United Arab Emirates in 1967, Algeria in 1969, Nigeria in 1971, Ecuador in 1973, and Gabon in 1975. OPEC's headquarters have been located in Vienna, Austria, since 1965.
The roots of OPEC go back to the 1950s. Backed by the governments of the United States and Great Britain, western oil companies dominated and operated the vast oil fields of the Middle East and elsewhere in the underdeveloped world. Each day these oil fields produced millions of barrels of crude oil, which then went by tanker or pipeline to refineries and distribution centers in America, Europe, and Japan. The oil companies kept the price of crude oil low in order to minimize their payments to the governments of the nations that actually owned the oil fields. A low price for crude oil also benefitted the consumers of western nations and meant more profit for the oil companies when they refined the oil into products such as gasoline.
OPEC was established by the oil-producing nations, the biggest of which were in the Middle East, to form a coordinated response. The economic growth enjoyed by the industrialized world in the 1960s, plus wasteful consumer preferences, such as large “gas guzzling” automobiles, made Western nations increasingly dependent on oil imports.
By the early 1970s, the oil producing nations had successfully seized control of their oil fields by nationalizing them. They then instituted a series of steep price hikes, backed by production quotas among OPEC members in order to prevent oversupply. The result was an energy crisis that caused economic turmoil and high inflation in the West as price hikes due to the increased cost of energy filtered through the economy. Further worsening the problem was an OPEC oil embargo against the U.S., inspired by the largely Arab member states in the Middle East after America supported Israel during the Arab-Israeli War of 1973.