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136-959: In 1973, the Organization of Petroleum Exporting Countries placed an oil embargo on nations perceived as assisting Israel in the Yom Kippur War . To combat the embargo, President Nixon established the Federal Energy Office (FEO) in December 1973, which was tasked with coordinating the American response to the embargo. In June 1974, the FEO was superseded by the FEA under the Federal Energy Administration Act of 1974 and Executive Order 11790 . The FEA

272-400: A circumstance may continue to exist for a long time, albeit in curtailed and small scales. By 1950, Saudi Arabia had become a very successful producing area, with an even greater undeveloped oil production potential. Because of favorable geological conditions and the close proximity of oil fields to the coast, Saudi Arabia operations were low cost. American companies therefore heavily valued

408-479: A day (mbpd) to the approximately 2 mbpd of cuts announced. In June 2003, the International Energy Agency (IEA) and OPEC held their first joint workshop on energy issues. They have continued to meet regularly since then, "to collectively better understand trends, analysis and viewpoints and advance market transparency and predictability." Widespread insurgency and sabotage occurred during

544-633: A doubling of its debt, reaching 100% of the Gross Domestic Product. Faced with increasing economic hardship (which ultimately contributed to the collapse of the Soviet bloc in 1989), the " free-riding " oil exporters that had previously failed to comply with OPEC agreements finally began to limit production to shore up prices, based on painstakingly negotiated national quotas that sought to balance oil-related and economic criteria since 1986. (Within their sovereign-controlled territories,

680-920: A dramatic end to the post-WWII economic boom . The 1973–1974 oil embargo had lasting effects on the United States and other industrialized nations, which established the International Energy Agency in response, as well as national emergency stockpiles designed to withstand months of future supply disruptions. Oil conservation efforts included lower speed limits on highways, smaller and more energy-efficient cars and appliances, year-round daylight saving time , reduced usage of heating and air-conditioning , better building insulation , increased support of mass transit , and greater emphasis on coal , natural gas , ethanol , nuclear and other alternative energy sources. These long-term efforts became effective enough that US oil consumption rose only 11 percent during 1980–2014, while real GDP rose 150 percent. But in

816-425: A gradual process. Before the discovery of oil, some Middle Eastern countries such as Iraq , Saudi Arabia , and Kuwait were all poor and underdeveloped. They were desert kingdoms that had few natural resources and were without adequate financial resources to maintain the state. Poor peasants made up a majority of the population. When oil was discovered in these developing nations during the early twentieth century,

952-478: A long time of being vertically integrated sellers to their own refineries. The increase in oil prices of the 70s attracted non-OPEC producers—Norway, Mexico, Great Britain, Egypt, and some African and Asian countries—to explore within their country. In 1965, the Herfindahl index of horizontal integration for the crude oil production industry was 1600 and the horizontal integration for the exploration industry

1088-665: A member of OPEC since the organization's founding, but Iraqi production was not a part of OPEC quota agreements from 1998 to 2016, due to the country's daunting political difficulties. Lower demand triggered by the 1997–1998 Asian financial crisis saw the price of oil fall back to 1986 levels. After oil slumped to around US$ 10/bbl, joint diplomacy achieved a gradual slowing of oil production by OPEC, Mexico and Norway. After prices slumped again in Nov. 2001, OPEC, Norway, Mexico, Russia, Oman and Angola agreed to cut production on 1 January 2002 for 6 months. OPEC contributed 1.5 million barrels

1224-434: A military coup d'état later that year on 24 November. Another coup 1958 brought an end to the military dictatorship in the country. The newly elected Minister of Mines and Hydrocarbons, Juan Pablo Pérez Alfonzo, acted to raise the income tax on oil companies and introduced the key aspect of supply and demand to the oil trade. On 29 August 1975, during the tenure of President Carlos Andrés Pérez , "Law that Reserves

1360-762: A number of bilateral and multilateral channels." The Fund became an official international development agency in May 1980 and was renamed the OPEC Fund for International Development , with Permanent Observer status at the United Nations. In 2020, the institution ceased using the abbreviation OFID. On 21 December 1975, Saudi Arabia's Ahmed Zaki Yamani , Iran's Jamshid Amuzegar , and the other OPEC oil ministers were taken hostage at their semi-annual conference in Vienna, Austria . The attack, which killed three non-ministers,

1496-750: A record US$ 147/bbl in July and then plunged back to US$ 32/bbl in December, during the worst global recession since World War II . OPEC's annual oil export revenue also set a new record in 2008, estimated around US$ 1 trillion, and reached similar annual rates in 2011–2014 (along with extensive petrodollar recycling activity) before plunging again. By the time of the 2011 Libyan Civil War and Arab Spring , OPEC started issuing explicit statements to counter "excessive speculation" in oil futures markets , blaming financial speculators for increasing volatility beyond market fundamentals. In May 2008, Indonesia announced that it would leave OPEC when its membership expired at

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1632-510: A record volume of worldwide oil inventories, and a collapse in oil prices that continued into early 2016. In spite of global oversupply, on 27 November 2014 in Vienna, Saudi oil minister Ali Al-Naimi blocked appeals from poorer OPEC members for production cuts to support prices. Naimi argued that the oil market should be left to rebalance itself competitively at lower price levels, strategically rebuilding OPEC's long-term market share by ending

1768-434: A result, the oil companies did not have any major problems with the change imposed by Venezuela. Even with increased oil prices, the companies still held a dominant position over Venezuela. The posted price of oil was originally the determinant factor of the taxes that oil companies had to pay. This concept was beneficial to the oil companies because they were the ones who controlled the posted prices. Companies could increase

1904-469: A share of participation or to take over the entire industry and employ the international companies on a contractual basis.” Due to the overall instability of supply, oil became an instrument of foreign policy for oil-exporting countries. Nationalization increased the stability in the oil markets and broke the vertical integration within the system. Vertical integration was replaced with a dual system where OPEC countries controlled upstream activities such as

2040-487: A slowdown in economic growth. At the same time, US oil production nearly doubled from 2008 levels and approached the world-leading " swing producer " volumes of Saudi Arabia and Russia, due to the substantial long-term improvement and spread of shale " fracking " technology in response to the years of record oil prices. These developments led in turn to a plunge in US oil import requirements (moving closer to energy independence ),

2176-522: A source of hope. OPEC's international aid activities date from well before the 1973–1974 oil price surge. For example, the Kuwait Fund for Arab Economic Development has operated since 1961. In the years after 1973, as an example of so-called " checkbook diplomacy ", certain Arab nations have been among the world's largest providers of foreign aid, and OPEC added to its goals the selling of oil for

2312-613: A stance that reflects how the kingdom has adapted to the evolving economic needs within OPEC and the broader international community. Emphasizing the need for a balanced and fair global energy transition , he highlighted the importance of diversifying energy sources and noted significant investments in natural gas , petrochemicals , and renewables . These efforts support economic development in emerging countries and align with global climate objectives . Additionally, he addressed shifting energy security concerns, stating, "Energy security in

2448-428: A substantial degree of worldwide competition. Moreover, because of an economic " prisoner's dilemma " that encourages each member nation individually to discount its price and exceed its production quota, widespread cheating within OPEC often erodes its ability to influence global oil prices through collective action . Political scientist Jeff Colgan has challenged that OPEC is a cartel, pointing to endemic cheating in

2584-780: A textbook example of a cartel (a group whose members cooperate to reduce market competition ) but one whose consultations may be protected by the doctrine of state immunity under international law. Current OPEC members are Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates and Venezuela. Meanwhile, Angola, Ecuador, Indonesia, and Qatar are former OPEC members. A larger group called OPEC+ , consisting of OPEC members plus other oil-producing countries, formed in late 2016 to exert more control on

2720-472: A textbook example of a cartel that cooperates to reduce market competition, as in this definition from OECD 's Glossary of Industrial Organisation Economics and Competition Law : International commodity agreements covering products such as coffee, sugar, tin and more recently oil (OPEC: Organisation of Petroleum Exporting Countries) are examples of international cartels which have publicly entailed agreements between different national governments. While OPEC

2856-645: Is at times cited as a textbook example of a cartel, various authoritative and academic sources provide a broader perspective on the organization's role. For instance, the US Energy Information Administration 's glossary explains OPEC as: An intergovernmental organization whose stated objective is to 'coordinate and unify the petroleum policies of member countries'. The Oxford Dictionary of Energy Science (2017) defines OPEC as: An organization set up in 1960 to coordinate petroleum policies among its member countries, initially with

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2992-591: Is communicated through certain channels (3) over time (4) among members of a social system.” Innovations may consist of technology , philosophy , or managerial techniques. Examples of communication channels include the mass media , organizations such as OPEC or the U.N. , or educational institutions . Due to diffusion, attempts at oil nationalization from producing countries, and whether or not these attempts were successful, affected decisions to nationalize oil supplies. Two attempts of nationalization that had clear inhibiting effects on other producing countries were

3128-480: Is difficult. The PFC study implies political groups unfavorable to capitalism in some countries tend to limit oil production increases in Mexico , Venezuela , Iran , Iraq , Kuwait and Russia. Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the other countries. This nationalization (expropriation) of previously privately owned oil supplies where it has occurred, has been

3264-471: Is estimated that 79.5 percent of the world's proven oil reserves are located within OPEC nations, with the Middle East alone accounting for 67.2 percent of OPEC's total reserves. In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil production in favor of oil-producing states and away from an oligopoly of dominant Anglo-American oil firms (the " Seven Sisters "). In

3400-412: Is often questioned why a government would respond to an oil price increase with nationalization rather than by imposing higher taxes. Contract theory provides reasoning against nationalization. The Third World went through dramatic structural change in the decades after oil was first discovered. Rising nationalism and the emergence of shared group consciousness among developing countries accompanied

3536-407: Is really the first illustration and at the same time the most concrete and most spectacular illustration of the importance of raw material prices for our countries, the vital need for the producing countries to operate the levers of price control, and lastly, the great possibilities of a union of raw material producing countries. This action should be viewed by the developing countries as an example and

3672-598: Is the Saudi concern that overly expensive oil or unreliable supply will drive industrial nations to conserve energy and develop alternative fuels, curtailing the worldwide demand for oil and eventually leaving unneeded barrels in the ground. To this point, Saudi Oil Minister Yamani famously remarked in 1973: "The Stone Age didn't end because we ran out of stones." To elucidate Saudi Arabia's contemporary approach, in 2024, Saudi Energy Minister Prince Abdulaziz bin Salman articulated

3808-528: Is the supreme authority of the organisation, and consists of delegations normally headed by the oil ministers of member countries. The chief executive of the organisation is the OPEC secretary general . The conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary. It generally operates on the principles of unanimity and "one member, one vote", with each country paying an equal membership fee into

3944-603: The Arab League 's first Arab Petroleum Congress convened in Cairo, Egypt, where the influential journalist Wanda Jablonski introduced Saudi Arabia's Abdullah Tariki to Venezuela's observer Juan Pablo Pérez Alfonzo , representing the two then-largest oil-producing nations outside the United States and the Soviet Union. Both oil ministers were angered by the price cuts, and the two led their fellow delegates to establish

4080-725: The Foreign Sovereign Immunities Act , and are therefore beyond the legal reach of US competition law governing "commercial" acts. Despite popular sentiment against OPEC, legislative proposals to limit the organisation's sovereign immunity, such as the NOPEC Act, have so far been unsuccessful. OPEC often has difficulty agreeing on policy decisions because its member countries differ widely in their oil export capacities, production costs, reserves, geological features, population, economic development, budgetary situations, and political circumstances. Indeed, over

4216-686: The Mediterranean Sea region, called the Tripoli Agreement . The agreement, signed on 2 April 1971, raised oil prices and increased producing countries' profit shares. During 1961–1975, the five founding nations were joined by Qatar (1961), Indonesia (1962–2008, rejoined 2014–2016), Libya (1962), United Arab Emirates (originally just the Emirate of Abu Dhabi , 1967), Algeria (1969), Nigeria (1971), Ecuador (1973–1992, 2007–2020), and Gabon (1975–1994, rejoined 2016). By

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4352-550: The Persian Gulf and previous concessionary companies induced an “artificial” vertical integration. These relations included long-term contracts, discount of official prices, and phase-out clauses. Free markets started to become prevalent in 1981 after the trade in oil switched from being a sellers’ to a buyers’ market. According to the Energy Studies Review the western world oil demand decreased 15% between

4488-721: The Six-Day War (1967), Yom Kippur War (1973), a hostage siege directed by Palestinian militants (1975), the Iranian Revolution (1979), Iran–Iraq War (1980–1988), Iraqi occupation of Kuwait (1990–1991), September 11 attacks (2001), American occupation of Iraq (2003–2011), Conflict in the Niger Delta (2004–present), Arab Spring (2010–2012), Libyan Crisis (2011–present), and international Embargo against Iran (2012–2016). Although events such as these can temporarily disrupt oil supplies and elevate prices,

4624-511: The Six-Day War in 1967. However, in 1973, the result was a sharp rise in oil prices and OPEC revenues, from US$ 3/bbl to US$ 12/bbl, and an emergency period of energy rationing , intensified by panic reactions, a declining trend in US oil production, currency devaluations, and a lengthy UK coal-miners dispute. For a time, the UK imposed an emergency three-day workweek . Seven European nations banned non-essential Sunday driving. US gas stations limited

4760-403: The forward market developed. As these new markets developed, price control became more difficult for OPEC. In addition, oil was transformed from a strategic product to a commodity . Changes in the spot market favored competition and made it more difficult for oligopolistic agreements. The development of many free markets impacted OPEC in two different ways: Currently, Algeria is one of

4896-574: The 1959 congress. Government representatives from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss ways to increase the price of crude oil produced by their countries, and ways to respond to unilateral actions by the MOCs. Despite strong US opposition: "Together with Arab and non-Arab producers, Saudi Arabia formed the Organization of Petroleum Export Countries (OPEC) to secure

5032-564: The 1970s forced major oil suppliers to look elsewhere for ways to acquire the resource. Under these circumstances, NOCs often came forward as alternative suppliers of oil. Nationalization of the Iraq Petroleum Company (IPC) in 1972 after years of rancor, together with restrictions on oil liftings by all but one of the IPC's former partners, put Iraq at the forefront of direct marketing. Iraq's oil production suffered major damage in

5168-518: The 1970s, restrictions in oil production led to a dramatic rise in oil prices with long-lasting and far-reaching consequences for the global economy. Since the 1980s, OPEC has had a limited impact on world oil-supply and oil-price stability, as there is frequent cheating by members on their commitments to one another, and as member commitments reflect what they would do even in the absence of OPEC. However, since 2020, OPEC countries along with non-OPEC participants had helped in stabilising oil markets after

5304-622: The 1970s, OPEC nations demonstrated convincingly that their oil could be used as both a political and economic weapon against other nations, at least in the short term. The embargo also meant that a section of the Non-Aligned Movement saw power as a source of hope for their developing countries . The Algerian president Houari Boumédiène expressed this hope in a speech at the UN's sixth Special Session, in April 1974: The OPEC action

5440-461: The 1973 oil crisis. In October 1973, the Organisation of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab majority of OPEC plus Egypt and Syria) declared significant production cuts and an oil embargo against the United States and other industrialized nations that supported Israel in the Yom Kippur War . A previous embargo attempt was largely ineffective in response to

5576-425: The 1980s largely failed to achieve its goals (limits on world oil supply, stabilized prices, and raising of long-term average revenues). He finds that members have cheated on 96% of their commitments. The analysis spans over the period 1982–2009. To the extent that when member states comply with their commitments, it is because the commitments reflect what they would do even if OPEC did not exist. One large reason for

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5712-466: The 1980–1988 Iran–Iraq War . But these two Iraqi wars against fellow OPEC founders marked a low point in the cohesion of the organization, and oil prices subsided quickly after the short-term supply disruptions. The September 2001 Al Qaeda attacks on the US and the March 2003 US invasion of Iraq had even milder short-term impacts on oil prices, as Saudi Arabia and other exporters again cooperated to keep

5848-486: The 1990s was one of the least developed and most poor. The local communities responded with protests and successful efforts to stop oil production in the area if they did not receive any benefit. By September 1999, about 50 Shell workers had been kidnapped and released. Not only are the people of Nigeria affected, but the environment in the area is also affected by deforestation and improper waste treatment . Nigerian oil production also faces problems with illegal trade of

5984-588: The 2003–2008 height of the American occupation of Iraq , coinciding with rapidly increasing oil demand from China and commodity -hungry investors, recurring violence against the Nigerian oil industry , and dwindling spare capacity as a cushion against potential shortages . This combination of forces prompted a sharp rise in oil prices to levels far higher than those previously targeted by OPEC. Price volatility reached an extreme in 2008, as WTI crude oil surged to

6120-517: The 70s, 80s, and 90s was more dependent on oil. Now, you get what happened last year... It was gas. The future problem on energy security will not be oil. It will be renewables. And the materials, and the mines." On 10 September 2008, with oil prices still near US$ 100/bbl, a production dispute occurred when the Saudis reportedly walked out of a negotiating session where rival members voted to reduce OPEC output. Although Saudi delegates officially endorsed

6256-593: The British a major share in what had been their single most valuable foreign asset. It had stopped the democratic transition in Iran however, leaving its mark for decades to come. The coup is widely believed to have significantly contributed to the 1979 Iranian Revolution after which the oil industry would be nationalized again. The properties of the majors were nationalized totally in Iraq, in 1972. Worldwide oil shortages in

6392-486: The COVID-19 pandemic resulted in a collapse in oil demand. This has allowed oil markets to remain stable relative to other energy markets that experienced unprecedented volatility. The formation of OPEC marked a turning point toward national sovereignty over natural resources . OPEC decisions have come to play a prominent role in the global oil-market and in international relations . Economists have characterized OPEC as

6528-782: The FEA Act mandated establishment of the National Energy Information System to "contain such energy information as is necessary to carry out the Administration’s statistical and forecasting activities." The Department of Energy Organization Act of 1977 created the United States Department of Energy (USDOE), which merged ERDA and FEA under USDOE. It also created the Energy Information Administration as

6664-512: The FEA could now remove refined petroleum products from pricing controls. By June 1976, fuel oil , middle distillates, naphtha , and gas oils were no longer under pricing controls. The Federal Energy Administration Act created the first U.S. agency with the primary focus on energy and mandated it to collect, assemble, evaluate, and analyze energy information. It also provided FEA with data collection enforcement authority for gathering data from energy producing and major consuming firms. Section 52 of

6800-516: The Libyan government used its leverage to restructure radically the terms of its agreements with these independent companies, precipitating a rash of contract renegotiations throughout the oil-exporting world. The discovery of oil in Nigeria caused conflict within the state. The emergence of commercial oil production from the region in 1958 and thereafter raised the stakes and generated a struggle by

6936-537: The Maadi Pact or Gentlemen's Agreement , calling for an "Oil Consultation Commission" of exporting countries, to which MOCs should present price-change plans. Jablonski reported a marked hostility toward the West and a growing outcry against " absentee landlordism " of the MOCs, which at the time controlled all oil operations within the exporting countries and wielded enormous political influence. In August 1960, ignoring

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7072-578: The Middle East at the time “was contributing only 5 percent of total world oil production and its exports were limited to countries within the immediate region and, via the Suez Canal, in western Europe.” The real significance of pre-1939 developments in the Middle East is that they established the framework for the post-1945 oil expansion. After World War II , the demand for oil increased significantly. Due to war-time oil development, which proved

7208-528: The Middle East outside Turkish control until after World War I when the former Turkish Empire was divided between the British and the French. It turned out that many of the areas controlled by the French had little oil potential. On the other hand, Britain continued to expand oil interests into other parts of the Persian Gulf . Although oil resources were found in Kuwait, there was not enough demand for oil at

7344-508: The North Sea, and the Gulf of Mexico. By 1986, daily worldwide demand for oil dropped by 5 million barrels, non-OPEC production rose by an even-larger amount, and OPEC's market share sank from approximately 50 percent in 1979 to less than 30 percent in 1985. Illustrating the volatile multi-year timeframes of typical market cycles for natural resources, the result was a six-year decline in

7480-551: The OPEC was the first intergovernmental body to leave the country because of restrictions on foreigners. Austria was keen to attract international organizations and offered attractive terms to the OPEC. During the early years of OPEC, the oil-producing countries had a 50/50 profit agreement with the oil companies. OPEC bargained with the dominant oil companies (the Seven Sisters), but OPEC faced coordination problems among its members. If one OPEC member demanded too much from

7616-442: The US following the breakup of John D. Rockefeller 's original Standard Oil monopoly. Oil-exporting countries were eventually motivated to form OPEC as a counterweight to this concentration of political and economic power . In February 1959, as new supplies were becoming available, the multinational oil companies (MOCs) unilaterally reduced their posted prices for Venezuelan and Middle Eastern crude oil by 10 percent. Weeks later,

7752-619: The Venezuelan State received a 50% profit from oil exploitation and 12% of the income tax. New taxes were also established to prevent companies from maintaining idle fields. While the world was in the midst of World War II , Venezuela increased its oil production to supply the Allies with fuel, much of the oil was refined in the Caribbean islands. Medina's government was overthrown by a coup on 18 October 1945; an interim government

7888-532: The actual price of oil without changing the posted price, thus avoiding an increase in taxes paid to the producing country. Oil-producing countries did not realize that the companies were adjusting oil prices until the cost of oil dropped in the late 1950s and companies started reducing posted prices very frequently. The main reason for the reduction in oil prices was the change in the world's energy situation after 1957 that led to competition between energy sources. Efforts to find markets led to price cuts. Price cutting

8024-492: The aftermath of the Gulf War . In spite of United Nations sanctions, Iraq has been rebuilding war-damaged oil facilities and export terminals. Iraq plans to increase its oil productive capacity to 4 million barrels (640 thousand cubic metres) per day in 2000 and 6 million bbl (950 thousand m ) per day in 2010. Libya, in particular, sought out independent oil firms to develop its oilfields; in 1970,

8160-482: The aim of securing a regular supply to consuming countries at a price that gave a fair return on capital investment. OPEC members strongly prefer to describe their organisation as a modest force for market stabilisation, rather than a powerful anti-competitive cartel. In its defense, the organisation was founded as a counterweight against the previous " Seven Sisters " cartel of multinational oil companies, and non-OPEC energy suppliers have maintained enough market share for

8296-476: The amount of petrol that could be dispensed, closed on Sundays, and restricted the days when petrol could be purchased, based on number plate numbers. Even after the embargo ended in March 1974, following intense diplomatic activity, prices continued to rise. The world experienced a global economic recession , with unemployment and inflation surging simultaneously , steep declines in stock and bond prices, major shifts in trade balances and petrodollar flows , and

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8432-457: The annual budget. However, since Saudi Arabia is by far the largest and most-profitable oil exporter in the world, with enough capacity to function as the traditional swing producer to balance the global market, it serves as "OPEC's de facto leader". At various times, OPEC members have displayed apparent anti-competitive cartel behavior through the organisation's agreements about oil production and price levels. Economists often cite OPEC as

8568-665: The attack, Carlos's accomplices revealed that the operation was commanded by Wadie Haddad , a founder of the Popular Front for the Liberation of Palestine . They also claimed that the idea and funding came from an Arab president, widely thought to be Muammar Gaddafi of Libya, itself an OPEC member. Fellow militants Bassam Abu Sharif and Klein claimed that Carlos received and kept a ransom between 20 million and US$ 50 million from "an Arab president". Carlos claimed that Saudi Arabia paid ransom on behalf of Iran, but that

8704-503: The best price available from the major oil corporations." The Middle Eastern members originally called for OPEC headquarters to be in Baghdad or Beirut, but Venezuela argued for a neutral location, and so the organization chose Geneva , Switzerland. On 1 September 1965, OPEC moved to Vienna , Austria, after Switzerland declined to extend diplomatic privileges . At the time, Switzerland was attempting to reduce their foreign population and

8840-637: The companies would be able to claim any of the oil they mined. As a result, the world's oil was largely in the hands of seven corporations based in the United States and Europe , often called the Seven Sisters . Five of the companies were American ( Chevron , Exxon , Gulf , Mobil , and Texaco ), one was British ( BP ), and one was Anglo-Dutch ( Royal Dutch Shell ). These companies have since merged into four: Shell, ExxonMobil , Chevron , and BP. The nations with oil reserves were unhappy with

8976-414: The control of the oil within their country. Furthermore, technological innovation and managerial expertise increased dramatically after World War II , which increased the bargaining power of producing countries. Increased bargaining power allowed the companies to change their mode of operation. Stephen J. Kobrin states that “During the interwar period and through the 1950s, international petroleum

9112-414: The countries did not have enough knowledge of the oil industry to make use of the newly discovered natural resources. The countries were therefore not able to mine or market their petroleum. Major oil companies had the technology and expertise and they negotiated concession agreements with the developing countries; the companies were given exclusive rights to explore and develop the production of oil within

9248-436: The countries would not have been able to get the oil. Contracts, which could not be altered or ended in advance of the true end date, covered huge expanses of land and lasted for long durations. Nationalist ideas began once producing countries realized that the oil companies were exploiting them. Many times these countries did not pay the companies for their loss of assets or only paid nominal amounts. The first country to act

9384-520: The country in exchange for making risky investments, discovering the oil deposits, producing the oil, and paying local taxes. The concession agreements made between the oil-producing country and the oil company specified a limited area the company could utilize, lasted a limited amount of time, and required the company to take all the financial and commercial risks as well as pay the host governments surface taxes, royalties , and production taxes. As long as companies met those requirements, governments promised

9520-408: The course of market cycles, oil reserves can themselves become a source of serious conflict, instability and imbalances, in what economists call the " natural resource curse ". A further complication is that religion-linked conflicts in the Middle East are recurring features of the geopolitical landscape for this oil-rich region. Internationally important conflicts in OPEC's history have included

9656-592: The creation of OPEC, individual oil-producing states were punished for taking steps to alter the governing arrangements of oil production within their borders. States were coerced militarily (e.g. in 1953, the US-UK-sponsored a coup against Mohammad Mosaddegh after he nationalized Iran's oil production) or economically (e.g. the Seven Sisters slowed down oil production in one non-compliant state and ramped up oil production elsewhere) when acted contrary to

9792-567: The early 1970s, OPEC's membership accounted for more than half of worldwide oil production. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo , OPEC's acting secretary general in 2006, urged his African neighbors Angola and Sudan to join, and Angola did in 2007, followed by Equatorial Guinea in 2017. Since the 1980s, representatives from Canada, Egypt, Mexico, Norway, Oman, Russia, and other oil-exporting nations have attended many OPEC meetings as observers, as an informal mechanism for coordinating policies. The oil market

9928-520: The early 1990s annual foreign investment in oil was below US$ 200 million, by the early 2000s it had surpassed US$ 1 billion (Campodónico, 2004). Changes in political power led to an increase in government control over oil extraction . In particular, the election of President Rafael Correa , on a resource-nationalism platform, prompted increases in government control and the approval of a windfall profits tax . Since its beginning, Iran's oil industry has experienced expansion and contraction. Rapid growth at

10064-512: The emergence of the OPEC market caused the spot market to change in both orientation and size. The spot market changed in orientation because it started to deal not only with crude oil but also with refined products. The spot market changed in size because as the OPEC market declined the number of spot market transactions increased. The development of the spot market made oil prices volatile. The risks involving oil investment increased. To protect against these potential risks, parallel markets such as

10200-490: The end of that year, having become a net importer of oil and being unable to meet its production quota. A statement released by OPEC on 10 September 2008 confirmed Indonesia's withdrawal, noting that OPEC "regretfully accepted the wish of Indonesia to suspend its full membership in the organization, and recorded its hope that the country would be in a position to rejoin the organization in the not-too-distant future." The differing economic needs of OPEC member states often affect

10336-516: The end of the formal colonial relationships in the 1950s and 1960s. Shared group consciousness among the oil-exporting countries was expressed through the formation of OPEC, increased contact and communication between countries, and attempts of common action among countries during the 1960s. The structure of the industry, which led to increased nationalistic mentality, was affected by the following important changes: Originally, oil-producing countries were poor and needed oil companies to help them produce

10472-506: The equilibrium between the major companies and the producing countries. Countries became aware of their options as these companies offered better agreement terms. The shortage of oil in the 1970s increased the value of oil from previous decades. The bargaining power of producing countries increased as both the country governments and the oil companies became increasingly concerned about the continued access to crude oil. Rogers defines diffusion as, “the process by which (1) an innovation (2)

10608-484: The flag' and their own ambitions for commercial success, which might mean a degree of emancipation from the confines of a national agenda." According to consulting firm PFC Energy , only 7% of the world's estimated oil and gas reserves are in countries that allow private international companies free rein. Roughly 65% are in the hands of state-owned companies such as Saudi Aramco , with the rest in countries such as Russia and Venezuela , where access by Western companies

10744-572: The frequent cheating is that OPEC does not punish members for non-compliance with commitments. In June 2020, all countries participating in the OPEC+ framework collectively agreed to the introduction of a Compensation Mechanism aimed at ensuring full conformity with and adherence to the agreed-upon oil production cuts. This initiative aligns with one of OPEC's stated objectives: to maintain a stable oil market, which, notably, has been relatively more stable than other energy commodities. The OPEC Conference

10880-409: The frequent disputes and instabilities tend to limit OPEC's long-term cohesion and effectiveness. In 1949, Venezuela initiated the move towards the establishment of what would become OPEC, by inviting Iran, Iraq, Kuwait and Saudi Arabia to exchange views and explore avenues for more regular and closer communication among petroleum-exporting nations as the world recovered from World War II . At

11016-519: The global crude-oil market. Canada, Egypt, Norway, and Oman are observer states. In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil production in favor of oil-producing states and away from an oligopoly of dominant Anglo-American oil firms (the Seven Sisters). Coordination among oil-producing states within OPEC made it easier for them to nationalize oil production and structure oil prices in their favor without incurring punishment by Western governments and firms. Prior to

11152-449: The global oil market and maximize profit . It was founded on 14 September 1960, in Baghdad by the first five members which are Iran , Iraq , Kuwait , Saudi Arabia , and Venezuela . The organization, which currently comprises 12 member countries, accounted for an estimated 30 percent of global oil production . A 2022 report further details that OPEC member countries were responsible for approximately 38 percent of it. Additionally, it

11288-636: The government failed and in 1951 the oil industry was nationalized. As a result of Britain's boycott and the Abadan Crisis , Iranian production dropped to virtually zero. On British initiative the CIA overthrew Prime Minister of Iran Mosaddegh in Operation Ajax . Formally the nationalization remained effective, but in practice a consortium of oil companies was allowed in under a by then standard 50/50 profit-sharing deal. The whole process had left

11424-599: The great potential for oil discovery in the Middle East, there was little hesitation in investing capital in Iran , Iraq , Kuwait and Saudi Arabia . Huge investments were made to improve the infrastructure needed to transport Middle Eastern oil. For example, investment was made on the Suez Canal to ensure that larger tankers could utilize it. There was also an increased construction of oil pipelines . The expansion of infrastructure to produce and transport Middle East oil

11560-502: The increase of royalties, as well as the increase of exploration and exploitation taxes. The State was also authorized to create companies or institutes for the development of the oil activity. On 13 March 1943, President Isaías Medina Angarita promulgated another Hydrocarbons Law, which established that from then on at least 10% of the crude oil had to be refined in Venezuela; the royalty or exploitation tax could not be less than 16.7%;

11696-495: The indigenes for control of the oil resources. The northern hegemony , ruled by Hausa and Fulani, took a military dictatorship and seized control of oil production. To meet popular demands for cheaper food during the inflationary period just after the civil war , government created a new state corporation, the National Nigerian Supply Company (NNSC). While oil production proceeded, the region by

11832-437: The interests of the Seven Sisters and their governments. The organisational logic that underpins OPEC is that it is in the collective interest of its members to limit the world oil supply in order to reap higher prices. However, the main problem within OPEC is that it is individually rational for members to cheat on commitments and produce as much oil as possible. Political scientist Jeff Colgan has argued that OPEC has since

11968-406: The internal debates behind OPEC production quotas. Poorer members have pushed for production cuts from fellow members, to increase the price of oil and thus their own revenues. These proposals conflict with Saudi Arabia's stated long-term strategy of being a partner with the world's economic powers to ensure a steady flow of oil that would support economic expansion. Part of the basis for this policy

12104-473: The lack of cooperation with international oil companies. These two incidences proved to other oil-producing countries that, until the structure of the oil industry changed to rely less upon international oil companies, any attempts to nationalize would be a great risk and would likely be unsuccessful. Once the oil industry structure changed, oil-producing countries were more likely to succeed in nationalizing their oil supplies. The development of OPEC provided

12240-465: The largest natural gas producers in what is known as the Arab World behind Qatar and Saudi Arabia . Algeria's nationalization of oil and gas came a mere nine years after the nation declared independence from colonial France which had ruled over the region for 130 years. Algeria joined OPEC in 1969 and fully nationalized its industry in 1971, but Algeria was taking steps to play a larger role in

12376-492: The market with cheap oil, causing prices to fall below US$ 10/bbl and higher-cost producers to become unprofitable. These strategic measures by Saudi Arabia to regulate oil prices had profound economic repercussions. As the swing producer in that period, the Kingdom faced significant economic strain. Its revenues dramatically decreased from $ 119 billion in 1981 to $ 26 billion by 1985, leading to substantial budget deficits and

12512-509: The medium in which producing countries could communicate and diffusion could occur rapidly. The first country to successfully nationalize after the structural change of the industry was Algeria , which nationalized 51% of the French companies only ten days after the 1971 Tehran agreement and later was able to nationalize 100% of their companies. The nationalization of Algerian oil influenced Libya to nationalize British Petroleum in 1971 and

12648-874: The money was "diverted en route and lost by the Revolution". He was finally captured in 1994 and is serving life sentences for at least 16 other murders. In response to a wave of oil nationalizations and the high prices of the 1970s, industrial nations took steps to reduce their dependence on OPEC oil, especially after prices reached new peaks approaching US$ 40/bbl in 1979–1980 when the Iranian Revolution and Iran–Iraq War disrupted regional stability and oil supplies. Electric utilities worldwide switched from oil to coal, natural gas, or nuclear power; national governments initiated multibillion-dollar research programs to develop alternatives to oil; and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska,

12784-438: The national governments of OPEC members are able to impose production limits on both government-owned and private oil companies.) Generally when OPEC production targets are reduced, oil prices increase. Leading up to his August 1990 Invasion of Kuwait , Iraqi President Saddam Hussein was pushing OPEC to end overproduction and to send oil prices higher, in order to help OPEC members financially and to accelerate rebuilding from

12920-403: The nationalizations of Mexico in 1938 and of Iran in 1951, which occurred prior to the important structural change in the oil industry. The Mexican nationalization proved that although it was possible to accomplish nationalization, it came at the cost of isolation from the international industry, which was dominated by the major companies at the time. The Iranian nationalization also failed due to

13056-586: The new quotas, they stated anonymously that they would not observe them. The New York Times quoted one such delegate as saying: "Saudi Arabia will meet the market's demand. We will see what the market requires and we will not leave a customer without oil. The policy has not changed." Over the next few months, oil prices plummeted into the $ 30s, and did not return to $ 100 until the Libyan Civil War in 2011. During 2014–2015, OPEC members consistently exceeded their production ceiling, and China experienced

13192-534: The next ministerial conference in June 2016. By 20 January 2016, the OPEC Reference Basket was down to US$ 22.48/bbl – less than one-fourth of its high from June 2014 ($ 110.48), less than one-sixth of its record from July 2008 ($ 140.73), and back below the April 2003 starting point ($ 23.27) of its historic run-up. Nationalization of oil supplies The nationalization of oil supplies refers to

13328-463: The oil and manage the oil reserves located within the country. However, as the countries began to develop, their demands for revenue increased. The industry became integrated into a local economy that required strategic control by the host country over pricing and the rate of production. Gradually, foreign investors lost the trust of oil-producing countries to develop resources in the national interest. Oil-producing countries demanded participation in

13464-535: The oil companies were exploiting them. Led by Venezuela, oil-producing countries realized that they could control the price of oil by limiting the supply. The countries joined together as OPEC and gradually governments took control of oil supplies. Before the 1970s there were only two major incidents of successful oil nationalization—the first following the Bolshevik Revolution of 1917 in Russia and

13600-430: The oil companies, then the oil companies could slow down production in that country and ramp up production elsewhere. The 50/50 agreements were still in place until 1970 when Libya negotiated a 58/42 agreement with the oil company Occidental , which prompted other OPEC members to request better agreements with oil companies. > In 1971, an accord was signed between major oil companies and members of OPEC doing business in

13736-514: The oil industry profiting from their reserves in the Sahara in 1963. Ecuador has had one of the most volatile oil policies in the region, partly a reflection of the high political volatility in the country. Petroecuador accounts for over half of oil production, however, as a result of financial setbacks combined with a drop in oil price, private companies increased oil investments in Ecuador. In

13872-428: The oil ministers' deaths would result in an attack on the plane. Boumédienne must also have offered Carlos asylum at this time and possibly financial compensation for failing to complete his assignment. Carlos expressed his regret at not being able to murder Yamani and Amuzegar, then he and his comrades left the plane. All the hostages and terrorists walked away from the situation, two days after it began. Sometime after

14008-434: The oil. The joint concessionary company, ARAMCO , agreed to the government's demand to use the introduced posted price as a way to calculate profits. Profit-sharing between ARAMCO and Saudi Arabia was established as a 50/50 split. Eventually the Saudi government fully purchased Aramco in 1980 renaming it as Saudi Aramco. In 1938, Venezuelan President Eleazar López Contreras enacted a new Hydrocarbons Law, which established

14144-520: The organization: "A cartel needs to set tough goals and meet them; OPEC sets easy goals and fails to meet even those." OPEC has not been involved in any disputes related to the competition rules of the World Trade Organization , even though the objectives, actions, and principles of the two organisations diverge considerably. A key US District Court decision held that OPEC consultations are protected as "governmental" acts of state by

14280-611: The original 63 hostages, with stops in Algiers and Tripoli , planning to fly eventually to Baghdad , where Yamani and Amuzegar were to be killed. All 30 non-Arab hostages were released in Algiers, excluding Amuzegar. Additional hostages were released at another stop in Tripoli before returning to Algiers. With only 10 hostages remaining, Carlos held a phone conversation with Algerian president Houari Boumédiène , who informed Carlos that

14416-409: The ownership of the governments of those countries. Once these countries become the sole owners of these resources, they have to decide how to maximize the net present value of their known stock of oil in the ground. Several key implications can be observed as a result of oil nationalization. "On the home front, national oil companies are often torn between national expectations that they should 'carry

14552-506: The percentage of the profits they had negotiated. But, due to the inclusion of choice-of-law clauses, the sovereign host countries could not simply change the contracts arbitrarily. In other words, disputes over contract details would be settled by a third party instead of the host country. The only way for host countries to alter their contracts was through nationalization (expropriation). Although undeveloped nations originally welcomed concession agreements, some nationalists began to argue that

14688-675: The price of oil, which culminated by plunging more than half in 1986 alone. As one oil analyst summarized succinctly: "When the price of something as essential as oil spikes, humanity does two things: finds more of it and finds ways to use less of it." To combat falling revenue from oil sales, in 1982 Saudi Arabia pressed OPEC for audited national production quotas in an attempt to limit output and boost prices. When other OPEC nations failed to comply, Saudi Arabia first slashed its own production from 10 million barrels daily in 1979–1981 to just one-third of that level in 1985. When even this proved ineffective, Saudi Arabia reversed course and flooded

14824-588: The primary Federal Government authority on energy statistics and analysis. Andrew Gibson was nominated to succeed Sawhill in 1974, but was withdrawn before the Senate had a chance to act on it. OPEC The Organization of the Petroleum Exporting Countries ( OPEC , / ˈ oʊ p ɛ k / OH -pek ) is a cartel enabling the co-operation of leading oil-producing and oil-dependent countries in order to collectively influence

14960-516: The process of confiscation of oil production operations and their property, generally for the purpose of obtaining more revenue from oil for the governments of oil-producing countries. This process, which should not be confused with restrictions on crude oil exports, represents a significant turning point in the development of oil policy. Nationalization eliminates private business operations—in which private international companies control oil resources within oil-producing countries—and transfers them to

15096-476: The production and marketing of crude oil while oil companies controlled downstream activities such as transportation, refining, distribution, and sale of oil products. Under the new dual structure, OPEC was neither vertically or horizontally integrated and was not able to take over the entire oil sector from the oil companies. The temporary fear of an oil shortage during the 1970s helped to hide this consequence. In addition, relations between producing countries of

15232-519: The profitability of high-cost US shale oil production. As he explained in an interview: Is it reasonable for a highly efficient producer to reduce output, while the producer of poor efficiency continues to produce? That is crooked logic. If I reduce, what happens to my market share? The price will go up and the Russians, the Brazilians, US shale oil producers will take my share... We want to tell

15368-464: The refined product on the black market . This is undertaken by authorized marketers in collusion with smuggling syndicates . Activities such as these severely affect the oil industries of both the state and MNCs . Oil production deferments arising from community disturbances and sabotage was 45mm barrels in 2000 and 35mm barrels in 2001. The state has not been a very effective means of controlling incursions such as these. The illegal oil economy in such

15504-472: The rest of its foreign companies by 1974. A ripple effect quickly occurred, spreading first to the more- militant oil producers like Iraq and then followed by more-conservative oil producers like Saudi Arabia. Stephen J. Kobrin states that “By 1976 virtually every other major producer in the mid-East, Africa, Asia, and Latin America had followed nationalizing at least some of its producers to gain either

15640-662: The second in 1938 in Mexico. Due to the presence of oil, the Middle East has been the center of international tension even before the nationalization of oil supplies. Britain was the first country that took interest in Middle Eastern oil. In 1908, oil was discovered in Persia by the Anglo-Persian oil company under the stimulus of the British government. Britain maintained strategic and military domination of areas of

15776-519: The socio-economic growth of poorer nations. The OPEC Special Fund was conceived in Algiers, Algeria , in March 1975, and was formally established the following January. "A Solemn Declaration 'reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment,' and called for measures to strengthen cooperation between these countries... [The OPEC Special Fund's] resources are additional to those already made available by OPEC states through

15912-650: The time of World War I declined soon after the start of World War II . Recovery began in 1943 with the reopening of supply routes to the United Kingdom . The oil was produced by what became the Anglo-Iranian Oil Company , but political difficulties arose with the Iranian government in the postwar period . Iran sought to rid itself of British political influence and the exploitation by AIOC. Negotiations between Anglo-Iranian Oil Company and

16048-413: The time of nationalization. The government of Brazil , under Getúlio Vargas , nationalized the oil industry in 1953, thereby creating Petrobras . Proponents of nationalization asserted that the original contracts held between an oil-producing country and an oil company were unfair to the producing country. Yet without the knowledge and skill brought into the country by the international oil companies,

16184-521: The time to develop in this area. Due to political and commercial pressure, it did not take long before the United States secured an entry into Middle Eastern oil supplies. The British government was forced to allow the US into Iraq and the Persian Gulf states. Iraq became dominated by US oil companies while Kuwait consisted of a 50/50 split between British and American companies. Up until 1939, Middle Eastern oil remained relatively unimportant in world markets. According to “The Significance of Oil,”

16320-623: The time, some of the world's largest oil fields were just entering production in the Middle East. The United States had established the Interstate Oil Compact Commission to join the Texas Railroad Commission in limiting overproduction. The US was simultaneously the world's largest producer and consumer of oil; the world market was dominated by a group of multinational companies known as the " Seven Sisters ", five of which were headquartered in

16456-468: The warnings, and with the US favoring Canadian and Mexican oil for strategic reasons, the MOCs again unilaterally announced significant cuts in their posted prices for Middle Eastern crude oil. The following month, during 10–14 September 1960, the Baghdad Conference was held at the initiative of Tariki, Pérez Alfonzo, and Iraqi prime minister Abd al-Karim Qasim , whose country had skipped

16592-577: The world adequately supplied. In the 1990s, OPEC lost its two newest members, who had joined in the mid-1970s. Ecuador withdrew in December 1992, because it was unwilling to pay the annual US$ 2 million membership fee and felt that it needed to produce more oil than it was allowed under the OPEC quota, although it rejoined in October 2007. Similar concerns prompted Gabon to suspend membership in January 1995; it rejoined in July 2016. Iraq has remained

16728-686: The world that high-efficiency producing countries are the ones that deserve market share. That is the operative principle in all capitalist countries... One thing is for sure: Current prices [roughly US$ 60/bbl] do not support all producers. A year later, when OPEC met in Vienna on 4 December 2015, the organization had exceeded its production ceiling for 18 consecutive months, US oil production had declined only slightly from its peak, world markets appeared to be oversupplied by at least 2 million barrels per day despite war-torn Libya pumping 1 million barrels below capacity, oil producers were making major adjustments to withstand prices as low as $ 40, Indonesia

16864-475: The years 1973 and 1982. In the same time period the major oil companies went from a production in the crude oil market of 30 to 15.2 million barrels (4.8 to 2.4 million cubic metres ), a decrease of nearly 50%. In this period, the production from reserves under their own control went from 25.5 to 6.7 million bbl (4.1 to 1.1 million m ), a decrease of 74%. As a result, important oil companies became important net buyers of crude oil after

17000-453: Was 1250. By 1986, it decreased to around 930 for the crude oil production industry and 600 for the exploration industry. This created a further destabilizing factor for OPEC. The world refining capacity of the major oil companies in 1973 was 23.2 million barrels (3.69 million cubic metres) per day. However, by 1982, their world refining capacity had decreased to 14 million bbl (2.2 million m ) per day. This decrease

17136-401: Was Venezuela, which had the most favorable concession agreement. In 1943, the country increased the total royalties and tax paid by the companies to 50% of their total profits . However, true equal profit sharing was not accomplished until 1948. Because oil companies were able to deduct the tax from their income tax , profits acquired by the oil companies did not change significantly and, as

17272-433: Was a result of their decreased access to the oil reserves of OPEC countries and, subsequently, the rationalization of their world refining and distribution network to decrease their dependence on OPEC countries. The increase in the refining capacity of OPEC countries that wanted to sell not only crude oil but also refined products further reinforced this trend towards rationalization. The nationalization of oil supplies and

17408-425: Was a very tight oligopoly dominated by seven major international oil companies ( Exxon , Shell, BP , Gulf , Texaco , Mobil and Chevron —as they are known today). However, between 1953 and 1972 more than three hundred private firms and fifty state-owned firms entered the industry, drawn by the explosion in oil consumption and substantially diminished barriers to entry.” The new, independent companies disturbed

17544-509: Was first achieved by shaving profit margins , but soon prices were reduced to levels far lower than posted prices as companies producing oil in the Middle East started to offer crude to independent and state-owned refineries. Producing countries became aggravated when the companies would reduce the prices without warning. According to “The Significance of Oil,” “small reductions in posted prices in 1958 and 1959 produced some indications of disapproval from certain Middle East governments, but it

17680-402: Was installed , which later gave way in 1948 to another democratically elected government presided by Rómulo Gallegos , during which the oil policy of "no more concessions" was promoted, which was also authored by the then Minister of Development of those two periods, Juan Pablo Pérez Alfonzo . Implementing a 50%-50% or fifty-fifty readjustment in 1948. Gallegos' government was in turn deposed by

17816-555: Was mainly under the operation of the seven major international oil companies. Prior to 1970, there were ten countries that nationalized oil production: the Soviet Union in 1918, Bolivia in 1937 and 1969, Mexico in 1938, Iran in 1951, Iraq in 1961, Burma and Egypt in 1962, Argentina in 1963, Indonesia in 1963, and Peru in 1968. Although these countries were nationalized by 1971, all of the “important” industries that existed in developing countries were still held by foreign firms . In addition, only Mexico and Iran were significant exporters at

17952-491: Was not until major cuts—of the order of 10 to 15 percent—were announced in 1960 that a storm broke over the heads of the companies whose decisions would reduce the oil revenues of the countries by 5 to 7 ½ percent.” High oil prices, on the other hand, raise the bargaining power of oil-producing countries. As a result, some say that countries are more likely to nationalize their oil supplies during times of high oil prices. However, nationalization can come with various costs and it

18088-612: Was orchestrated by a six-person team led by Venezuelan terrorist " Carlos the Jackal ", and which included Gabriele Kröcher-Tiedemann and Hans-Joachim Klein . The self-named "Arm of the Arab Revolution" group declared its goal to be the liberation of Palestine . Carlos planned to take over the conference by force and hold for ransom all eleven attending oil ministers, except for Yamani and Amuzegar who were to be executed. Carlos arranged bus and plane travel for his team and 42 of

18224-557: Was rejoining the export organization, Iraqi production had surged after years of disorder, Iranian output was poised to rebound with the lifting of international sanctions , hundreds of world leaders at the Paris Climate Agreement were committing to limit carbon emissions from fossil fuels, and solar technologies were becoming steadily more competitive and prevalent. In light of all these market pressures, OPEC decided to set aside its ineffective production ceiling until

18360-608: Was tasked with managing fuel allocation, pricing regulation, and energy data collection and analysis. The Energy Research and Development Administration (ERDA) was created by the Energy Reorganization Act of 1974 and managed the energy research and development , nuclear weapons , and naval reactors programs. In December 1975, Energy Policy and Conservation Act directed the FEA to change petroleum pricing regulations such that crude oil prices would rise gradually. Additionally, subject to congressional review,

18496-484: Was tight in the early 1970s, which reduced the risks for OPEC members in nationalising their oil production. One of the major fears for OPEC members was that nationalisation would cause a steep decline in the price of oil. This prompted a wave of nationalisations in countries such as Libya, Algeria, Iraq, Nigeria, Saudi Arabia and Venezuela. With greater control over oil production decisions and amid high oil prices, OPEC members unilaterally raised oil prices in 1973, prompting

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