Multinational organization of oil produding countries, established September 1960, constituted January 1961.
After the process of decolonization had created sovereign states in the major oil-producing regions of the world, their governments were committed to wrest control over their natural resources from the oil companies of the previous colonial powers. (Iran, for example, nationalized its oil production in 1951 under prime minister Mosaddeq.)
The OPEC was established to coordinate the oil policies of its members and provide them with technical assistance and economic aid. Iran, Iraq, Kuwait, Saudi Arabia and Venezuela were the founding members; they were later joined by Qatar, Indonesia, Libya, Abu Dhabi (membership later transferred to the United Arab Emirates), Algeria, Nigeria, Ecuador and Gabon. Members meet at conferences twice annually and make decisions by unanimity.
At the 35th conference, held in September and October 1973, a decision was taken to take control of the export price of OPEC's oil production. At the beginning of 1973 a barrel of crude oil traded for US$3.00. OPEC set a first price increase of 70% in October. It was followed by another increase of 130%, implemented in retaliation against the support of the major oil buyers for Israel's war of 1973 and the following occupation of Palestine. At the same time OPEC declared a temporary embargo on shipments to the USA and to the Netherlands.
More price increases followed, and by 1980 the price of a barrel of crude oil had risen to US$30.00. The OPEC member countries used the increased income to develop their infrastructure and acquire investment in the USA and Europe. In 1976 OPEC established the OPEC Fund for International Development to assist developing countries.
The success of OPEC during the period 1973 - 1980 had a significant impact on world development. It stimulated interest in alternative energies in the developed world and encouraged the developing countries to become more assertive in the United Nations.
The OPEC membership is heterogeneous, and unity within the organization can only be maintained if all members are threatened by the same adversary. After 1980 the influence of OPEC in the world energy market has varied. On occasions members even fought war against each other (Iran and Iraq, 1980). The organization continues to negotiate production quota for its members in an effort to maintain an adequate price for its product.