OIL PRICES AND OPEC: THE

ORGANIZATION OF PETROLEUM
EXPORTING COUNRIES
Petroleum has been know of and exploited by humans for more than 4,000 years. For example,
asphalt was used for construction in the Fertile Crescent, oil wells were drilled in China in 347
A.D. and Baghdad's streets were covered in tar in the 8th century.

In the early 20th century, oil fields were established worldwide in countries such as Canada,
Mexico and the U.S. By the 1950s, oil overtook coal as the world's primary fuel source.

Crude oil is one of the most basic global commodities . Fluctuation in the crude oil prices have
both direct and indirect impacts on the global economy . Therefore, the prices crude oil are
tracked very closely by investors the world over. Crude oil prices have gone up to record levels of
USD 125 per bbl (rise of around 70 percent from previous year's levels) in the year 2008 and
have also reached a record low of 50$ a bbl in the same year ,highlighting the fluctuations that oil
prices are subject to.

The price variation in crude oil impacts the sentiments and hence the volatility in stock markets
all over the world. The rise in crude oil prices is not good for the global economy. Price rise in
crude oil virtually impacts industries and businesses across the board. Higher crude oil prices
mean higher energy prices, which can cause a ripple effect on virtually all business aspects that
are dependent on energy (directly or indirectly).specially industries related to the transport and
energy sector.

There are many factors that influence the global crude oil prices including technology to increase
production , storage of crude oil by richer nations (one major indicator that is tracked closely is
the US crude oil inventory data), changes in tax policy, political issues etc. In the recent past, we
have seen many factors influencing the prices of global crude oil.

Some of the most important factors affecting the price of crude oil are factors such as demand for
crude oil, in the global economy in general, production of crude oil and its availability ,natural
factors such as a natural calamity in oil producing areas and so on. However in today’s times one
of the mast important factors controlling crude oil prices is OPEC .

With the establishment of the U.S. Mandatory Oil Import Quota Program in 1959, the amount of
imported oil into the U.S. was severely limited, with preferences to imports from Canada and
Mexico. By excluding oil from the Persian Gulf, prices dropped, causing concern among some of
the world's top oil-producing states.

The Venezuelan Energy and Mines Minister Juan Pablo Pérez Alfonzo and Saudi Arabian Energy
and Mines Minister Abdullah al-Tariki urged government representatives from Iran, Iraq, Kuwait,
Saudi Arabia and Venezuela to hold the Baghdad Conference Sept. 10-14, 1960. The meeting's
main objective was to discuss crude oil production and to work on better communication among
the invited countries
A large part of the world's crude oil share is produced by OPEC (Organisation of Petroleum
Exporting Countries) nations. Any decisions made by OPEC countries to raise the prices or
reduce production, immediately impacts the prices of crude oil in the global commodity markets.

The Organization of the Petroleum Exporting Countries (OPEC) was created at the Baghdad
Conference in Iraq in September 1960. The founding members of the organization were Iran,
Iraq, Kuwait, Saudi Arabia and Venezuela. These five states were later joined by eight other
countries: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria
(1969), Nigeria (1971), Ecuador 1973), and Gabon (1975). Ecuador and Gabon withdrew(from
the organization in 1992 and 1994, respectively.

The oil industry has been plagued with falling prices ever since Colonel Drakes' discovery of oil
at Titusville, Pennsylvania in 1859. Just as the major oil companies colluded from the 1920's to
the1960’s The purpose of OPEC, as with any cartel, is to limit supplies in the hope of keeping
prices high and to prevent prices (and profits) from falling, members of OPEC meet on a regular
basis to set production levels in the hope of maintaining prices. The essential nature of oil (no
substitutes) coupled with its limited number of suppliers make it the ideal product for
cartelization.

The rise of OPEC is tied to a shifting balance of power from the multinational oil companies to
the oil producing countries. Lacking exploration skills, production technology, refining capacity,
and distribution networks, oil producing countries were unable to challenge the dominance of the
oil companies prior to World War II. However, about the time of World War II the oil exporting
countries began seeking better terms in their oil contracts.

Prior to this event, and until the late 1950s, the international oil industry had been characterised
mainly by the dominant position of the major multi- national oil companies through a system of
oil concessions granted to the major oil-producing countries, according to which these
companies were interlinked in the “upstream” phase of the industry, i.e. exploration, development
and production of crude oil. Through joint ownership of the holding companies that operated in
various countries, they were able to plan their production of crude oil according to their
requirements.

The oldest example of this kind of “horizontal integration” (i.e. the companies’ being interlinked
in the upstream phase) was the Iraqi Petroleum Company (IPC), Compaigne Francaise Petrol,
Royal Dutch Shell, Standard oil (New Jersey),Mobil and Gulbenkian.. These were also known as
the “seven sisters”

Each of these “sisters” had its own “downstream” operations, i.e. transportation, refining, oil
products and distribution networks, which made them “vertically” integrated. This compact
system of horizontal and vertical integration allowed the companies to plan for their future crude
oil requirements in line with their downstream requirements – i.e. the amount of oil products
needed by each, according to its market outlets in the countries to which crude oil is shipped

“However, by the second half of the 1950s, this compact system of complete control of
production and inter-company exchanges began to weaken with the appearance of independent oil
companies searching for an access to cheaper crude oil. This new development led to the creation
– albeit on a limited scale – of a free market for buying and selling crude oil outside the control of
the major companies. The state-owned Italian company, ENI, was able to find its way in
investing beyond the control of the “Seven Sisters” by offering different and better financial
terms than the oil concessions. Similarly, many independent oil companies began to invest
outside the Sisters’ control by offering apparently better financial terms than the oil concession
system.

A market price began to shape up in the form of discounts off the ‘posted’ price set by the major
oil companies. On the other hand, a new pattern of tax relationship emerged following the entry
of newcomers investing in oil in new areas such as Libya, where the government’s per-barrel
share was not calculated on the official posted price, which was a fixed price, but rather on the
basis of a price realized in the free market, which was always below the posted price; and in

this way, when the realized price falls, the host government’s per-barrel-share falls accordingly,
and the tax cost for the new producer would correspondingly fall lower thus providing a good
margin of profit from the new investor with which to re=invest in the production of crude oil.

The downward push on prices led to a policy debate in Washington. Although the United States
had been a net exporter of oil until 1948, the expansion of cheaply produced oil from the middle
east led to rising imports. As prices fell, domestic producers simply could not compete.
Moreover, the Eisenhower Administration concluded (as the Japanese had prior to World War II),
dependence on foreign oil placed the country's national security in jeopardy. The U.S. responded
with an import quota.

This deprived many independent American oil companies that had access to foreign crude oil
from entering the US market – a situation that led to their having to sell surplus crude outside the
major oil companies’ system.

The quota kept domestic prices artificially high and represented a net transfer of wealth from
American oil consumers to American oil producers. By 1970, the world price of oil was $1.30
and the domestic price of oil in the US was$3.18 .

In order to recapture profits, the multinational oil companies tried to cut the "posted" price from
1958onward. In 1959, British Petroleum unilaterally cut oil prices by about 10 percent. It
instantly set off denunciation from the oil exporting countries. In 1960, after a second cut in the
posted price in August

The five major oil producing countries responded by forming the Organization of Petroleum
Exporting Countries cartel in September 1960 . No one could have foreseen at that time that this
event would play such a crucial role, some ten years or so later, in reshaping the world energy
scene and have such an impact on the world economy. The event at the time passed almost
unnoticed, except perhaps by the specialised petroleum press.

OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in
order to secure fair and stable prices for petroleum producers; an efficient, economic and regular
supply of petroleum to consuming nations; and a fair return on capital to those investing in the
industry

.During its first decade, OPEC was able to halt the free fall in prices. However, it was not able to
raise prices as most members had hoped.

In general, commodity cartels collapse because there are many substitutes for the product or there
are many potential producers of the product. A cartel inspired rise in prices not only creates
encouragement for firms to enter the market but also promotes the consumption of substitutes
which may be close or remote.

Cartels also suffer from a "collective action problem." That is, every member has an incentive to
cheat on the the cartel by increasing its production. For example, an individual country such as
Iran can increase its oil revenues by expanding production as long as all other members stick to
their quotas. However, all members have a similar incentive to increase production -- i.e., they all
want to free ride on the collective oil revenues by expanding production as long as all other
members stick to their quotas. good. The incentive to cheat implies that cartels are traditionally
short-lived enterprises.

Although the essential nature of oil and the limited number of suppliers worked in the OPEC's
favor, the power of the organization remained limited during the first decade for five reasons.:
Firstly, OPEC’S share of world production was only 28% in 1960. By 1970, this figure would
rise to 41%. of world production. Secondly, most of the oil reserves in the ground belonged to
multinational corporations (except in Iran) also severely limited the power of OPEC countries
Thirdly the oil glut of the 1960’s made the problem more severe.it made any attempt to raise
prices unfeasible. Fourthly, the oil exporting countries were desperate for revenue to fuel
economic development .and important political divisions existed in the Arab world. The
revolutionary government of Nasser repeatedly clashed with the Saudi monarchy. Iraq threatened
to invade its neighbor Kuwait (it was deterred by the deployment of British forces). Iran and
Saudi Arabia vied for leadership of the Middle East.

OPEC's fortunes began to shift in the early 1970's as rising demand for oil began to outstrip
production. Also , the oil producing states began demanding further concessions. As the world oil
market tightened, the Arab world became more vocal in calling for use of the oil weapon to
achieve their economic and political objectives.

This was most acutely realized in the oil embargo during the 1973 Yom Kippur between Egypt
and Israel The gulf states bent on destroying the newly created state of Israel which according to
them had taken away land which rightfully belonged to the Palestinian Muslims wanted to use
control over oil as a method to reign in the so called “westernized” nations.

Saudi Arabia refused to increase production in order to halt rising prices unless the U.S. backed
the Arab position. Arab oil ministers than agreed to an embargo to further their political
objectives. Production would be cut by 5 percent per month until the West backed down. States
adopting a "friendly" position (from the Arab perspective) would be unaffected. When Nixon
publicly proposed a $2.2 billion military aid package for Israel, Arab states began an oil embargo
against the United States (later expanded to the Netherlands, Portugal, South Africa, and
Rhodesia).

If there was any doubt that the ability to control crude oil prices had passed from the United
States to OPEC it was removed during the Arab Oil Embargo. The extreme sensitivity of prices
to supply shortages became all too apparent when prices increased by approximately400 percent
in six short months.

The jump in prices was unprecedented. Oil prices increased from about $3.00 a barrel before the
war to $11.65. The embargo, which did not end until the Syrian-Israeli disengagement was
secured, drove the world economy into deep recession.. Gross national product in the U.S.
declined by 6 percent in the following two years. The Japanese economy shrinks for the first time
since the Second World War and the power and the hold of OPEC over oil prices made its
presence felt

From 1974 to 1978 world crude oil prices were relatively flat ranging from $12.21 per barrel to
$13.55 per barrel. When adjusted for inflation the price over that period of time world oil prices
were in a period of moderate decline.

The Second Oil Shock began when the Iranian Revolution and ensuing halt of Iranian petroleum
exports had caused panic and speculations in the world oil market. When the Carter
administration placed an embargo on the importing of Iranian oil into the United States and froze
Iranian assets in response to the hostage taking, Iran counterattacked by prohibiting the exporting
of Iranian oil to any American firm.

Moreover, the outbreak of the war between Iran and Iraq in 1980 shook the oil market as well. In
its initial stage, the Iran-Iraq war abruptly removed almost 4 million daily barrels of oil from the
world market—15 percent of total OPEC output and 8 percent of free world demand. In 1980
OPEC representatives (with the exception of Saudi Arabia) agreed to set prices at thirty-six dollar
a barrel causing another unprecedented increase in oil prices,

The petroleum market confronted the OPEC with an unpalatable choice: cut prices in order to
regain markets or cut production to maintain price. However, the OPEC countries did not want to
reduce prices, for fear that they would undermine their whole pricing structure, lose their great
economic

and political gains, and so diminish their political influence. However demand had peaked in
1979 and it became clear that the only way to for OPEC to maintain prices was by reducing
OPEC production. OPEC reduced its total production by a third during the first half of the 1980s.
As a result OPEC's share in world oil production dropped below 30 percent.

The Iranian revolution resulted in the loss of 2 to 2.5 million barrels per day of oil production
between November, 1978 and June, 1979. At one point production almost halted.

The two oil price shocks triggered enormous investments in scientific research to improve the
efficiency of technology in finding, developing and producing oil and thus reducing the high cost
of upstream operations in these new areas, thus adding for the oil companies an even higher
margin of profit with which to reinvest in high-cost areas

The influence of OPEC appeared to be diminishing as the production by Mexico, Britain,

Norway, and other non-OPEC countries and Alaska was continuing to increase. Anxious to
increase market share, they were making significant cuts in their official prices. As a result,
OPEC's share of world output quickly fell by 25 percent.

With this continued decline in the call on its oil, OPEC saw its own market share fall from 62%
in the mid-1970s to 37% in 1985, all as a result of increasing supplies from outside OPEC,
coupled with the fall in demand as a result of high prices. For example, North Sea production
(both British and Norwegian) leapt to 3.5 mbpd in 1985, having been less than 200 tbpd, or
2mbpd in 1975, and continued to rise thereafter. The reason behind this was that OPEC’s high
prices provided such a wide profit margin for oil investors that high-cost areas such as the North
Sea became not only feasible but highly lucrative areas for continued reinvestment. Because of
the fact that OPEC adhered to the system of fixed price and swing production, any additional oil
coming from outside OPEC would capture first its share in the market before buyers resorted to
OPEC oil; and the greater the supplies of non-OPEC oil, the less OPEC oil on the market to meet
world demand.

Oil revenues for OPEC members plunged after 1981. Saudi Arabia, the largest producer in
OPEC, saw its oil revenues plunge from $113.2 billion in 1981 to just $20.0 billion in
1986. Although the Second Oil Shock sent the developed world into recession, the most serious
long run impact of the second shock was in the developing world. During the 1970s, the oil
producing states placed a significant portion of their revenue into commercial banks because they
simply could not spend the money as fast as it came in. The commercial banks loaned this money
to developing countries which hoped to repay the loans with revenue from their rapidly growing
economies.

Higher prices also resulted in increased exploration and production outside of OPEC.
From 1980 to 1986 non-OPEC production increased 10 million barrels per day. OPEC
was faced with However, the developed world responded to the Second Oil Shock by
rapidly raising interest rates which deepened the on-going recessions. The developing
countries saw exports fall, oil import prices rise, and interest payments skyrocket. The
result was the creation of a debt crisis which was felt all over the which was felt all over
the developing world.

From 1982 to 1985, OPEC attempted to set production quotas low enough to stabilize prices.
These attempts met with repeated failure as various members of OPEC produced beyond their
quotas. During most of this period Saudi Arabia acted as the swing producer cutting its
production in an attempt to stem the free fall in prices. In August of 1985, the Saudis tired of this
role. They linked their oil price to the spot market for crude and by early 1986 increased
production from 2 MMBPD to 5 MMBPD. Crude oil prices plummeted below $10 per barrel by
mid-1986. Despite the fall in prices Saudi revenue remained about the same with higher volumes
compensating for lower prices.

A December 1986 OPEC price accord set to target $18 per barrel bit it was already breaking
down by January of 1987and prices remained weak.

However the OPEC did not always organize a united front against this pressure. For example,
Saudi Arabia, whose oil production far surpassed other member countries, had championed
decisions for low pricing for larger market-sharing and long-term gains

The third major price hike in occurred in 1990-1 when Iraq invaded its fellow OPEC member

Kuwait. Iraq had long claimed the territory of Kuwait; in 1961 it appeared Iraq was going to
swallow its tiny neighbour until the dispatch of troops by the British.

In 1991 the on-going territorial conflict was exacerbated by two oil issues: Firstly, the continued
pumping of oil by Kuwait from a field located under both countries; and secondly low oil
revenues for Iraq which made paying off its war debts (to Kuwait and others) difficult. A
successful invasion, from the point of view of Iraq would expand reserves, augment Iraqi power
in OPEC, raise oil prices and revenue, and annul war debts to Kuwait.
Iraq had gambled that the U.S. response would be political and economic. However, the Iraqi
invasion triggered a military response which was supported by an unlikely coalition of western,
developing, he price of crude oil spiked in 1990 with the lower production and uncertainty
associated with the Iraqi invasion of Kuwait and the ensuing Gulf War. The world and
particularly the Middle East had a much harsher view of Saddam Hussein invading Arab Kuwait
than they did Persian Iran. The proximity to the world's largest oil producer helped to shape the
reaction.

The war had sent oil prices skyrocketing through the ceiling. However, Saudi Arabia expanded
production by literally millions of barrels per day to keep prices from rising a great deal.

Since the war, Iraq's refusal to comply with United Nations resolutions had resulted in the
continuation of an oil embargo. following what became known as the Gulf War to liberate
Kuwait crude oil prices entered a period of steady decline until in 1994 inflation adjusted prices
attained their lowest level since 1973. .

The price cycle then turned up. The United States economy was strong and the Asian Pacific
region was booming. From 1990 to 1997 world oil consumption increased 6.2 million barrels per
day. Asian consumption accounted for all but 300,000 barrels per day of that gain and contributed
to a price recovery that extended into 1997. Declining Russian production contributed to the price
recovery. Between 1990 and 1996 Russian production declined over 5 million barrels per day.

OPEC continued to have mixed success in controlling prices. There were mistakes in timing of
quota changes as well as the usual problems in maintaining production discipline among its
member countries.

The price increases came to a rapid end in 1997 and 1998 when the impact of the economic crisis
in Asia was either ignored or severely underestimated by OPEC. In December, 1997 OPEC
increased its quota by 2.5 million barrels per day (10 percent) to 27.5 MMBPD effective January
1, 1998. The rapid growth in Asian economies had come to a halt. In 1998 Asian Pacific oil
consumption declined for the first time since 1982. The combination of lower consumption and
higher OPEC production sent prices into a downward spiral. In response, OPEC cut quotas by
1.25 million b/d in April and another 1.335 million in July. Price continued down through
December 1998.

Prices began to recover in early 1999 and OPEC reduced production another 1.719 million barrels
in April. As usual not all of the quotas were observed but between early 1998 and the middle of
1999 OPEC production dropped by about 3 million barrels per day and was sufficient to move
prices above $25 per barrel.

With minimal problems in the beginning of 2000 and growing US and world economies the price
continued to rise throughout 2000 to a post 1981 high

Between April and October, 2000 three successive OPEC quota increases totaling 3.2 million
barrels per day were not able to stem the price increases. Prices finally started down following
another quota increase of 500,000 effective November 1, 2000

Russian production increases dominated non-OPEC production growth from 2000 forward and
was responsible for most of the non-OPEC increase since the turn of the century.
Once again it appeared that OPEC overshot the mark. In 2001, a weakened US economy and
increases in non-OPEC production put downward pressure on prices. In response OPEC once
again entered into a series of reductions in member quotas cutting 3.5 million barrels by
September 1, 2001. In the absence of the September 11, 2001 terrorist attack this would have
been sufficient to moderate or even reverse the trend .In the wake of the attack crude oil prices
plummeted. Prices in the U.S. were down 35 percent by the middle of November.

Under normal circumstances a drop in price of this magnitude would have resulted an another
round of quota reductions but given the political climate OPEC delayed additional cuts until
January 2002. It then reduced its quota by 1.5 million barrels per day and was joined by several
non-OPEC producers including Russia who promised combined production cuts of an additional
462,500 barrels. This had the desired effect with oil prices moving into the $25 range by March,
2002.

By mid-year the non-OPEC members were restoring their production cuts but prices continued to
rise and U.S. inventories reached a 20-year low later in the year.

By year end oversupply was not a problem. Problems in Venezuela led to a strike among workers
in oilfields causing Venezuelan production to plummet. In the wake of the strike Venezuela was
never able to restore capacity to its previous level and is still about 900,000 barrels per day below
its peak capacity of 3.5 million barrels per day. OPEC increased quotas by 2.8 million barrels per
day in January and February, 2003.

On March 19, 2003, just as some Venezuelan production was beginning to return, military action
commenced in Iraq. Meanwhile, inventories remained low in the U.S. and other OECD countries.
With an improving economy U.S. demand was increasing and Asian demand for crude oil was
growing at a rapid pace.

The loss of production capacity in Iraq and Venezuela combined with increased OPEC
production to meet growing international demand led to the erosion of excess oil production
capacity. In mid 2002, there was over 6 million barrels per day of excess production capacity and
by mid-2003 the excess was below 2 million. During much of 2004 and 2005 the spare capacity
to produce oil was under a million barrels per day. A million barrels per day is not enough spare
capacity to cover an interruption of supply from most OPEC producers.

In a world that consumes over 80 million barrels per day of petroleum products that added a
significant risk premium to crude oil price and was largely responsible for prices in excess of
$40-$50 per barrel.

The world demand for oil has averaged growth of 1.6% a year over the past 15 years, while world
Gross Domestic Product growth averaged 2.9% over the same 15-year period up to end 2007.. In
January 2008 the price of crude oil touched about 100$ a barrel. This increased to approximately
150$ a barrel by mid july 2008 before falling by 20$ in the course of a few days. currently oil
prices are fluctuating to hover around the 50$ benchmark. After the U,S. Economic slowdown
and the global recession in general, the world demand for energy has reduced and therefore
production quotas for the OPEC are expected to fall further.

However the cartel has faced several problems since its inception in 1960. There are 2 major
problems that t OPEC or any other cartel faces two problems in their attempts to control prices.
The first problem is to determine the level of production which meets their collective goals.
Simply stated, for OPEC this means maintaining production levels which insure the highest
prices possible without encouraging competition outside of OPEC or significant conservation
measures on the part of consumers.

After studying the fluctuation of oil prices after the formation of the OPEC cartel, we can
conclude that the volatile nature of the oil prices has not reduced, In certain cases such as the
embargoes placed on oil and the reduction of production quotas, The OPEC has actually been
responsible for the creation of oil price fluctuations, thereby creating an anomaly, as the OPEC
had been founded with the objective of bringing about a stability in oil prices.

In fact the figure given below documents the constant fluctuation in oil prices over the years.
Even though they have not been adjusted for inflation one can make out the changes in prices at
the interval of a decade or so.

One of the major limitations of the OPEC is its increased politicization. And oil supplies being
dictated by political motives. Oil price shocks occurred during the Arab oil embargo, the Iranian
revolution as well as the Iraqi invasion of Kuwait. Prices also fluctuated during USA’s “war on
terror” in Iraq.

Apart from being driven by political considerations, most of the member states of the OPEC are
dependent on oil revenues which accounts for the maximum proportions of their GDP’s. This
creates a situation where oil prices may not be determined by market forces but instead, by the
short term financial requirements of the country,

OPEC has also been behest by problems due to internal divisions, squabbles and disagreements
among member nations. In fact a major key to understanding why OPEC does not always do what
seems obvious to the rest of us is the battle for market share within OPEC.

In fact OPEC has had troubles because of the non adherence of members to production quotas
and therefore leading to internal weaknesses. It is important to note that we are now taking into
consideration the OPEC member's share within OPEC and not their share of total world
production. Saudi Arabia acted as swing producer for OPEC during the first half of the 1980s in
an attempt to shore up declining prices. By 1986 the Saudis tired of this role. Other OPEC
member countries were cheating on their quotas. In response Saudi Arabia rapidly increased
production causing a major price collapse. he lower prices did have a positive result for OPEC. It
encouraged increased consumption and halted production increases in much of the rest of the
world. By the end of the decade of the 1980s OPEC and prices seemed to have stabilized.

In fact the Arab leg of the OPEC (Arab members of the organization of petroleum exporting
countries) was founded after internal squabbles among the OPEC

Moreover oil price shocks have also led to an increased demand for research into and innovation
of new sources of energy. increased oil efficiency may also have reduced its power to some
extent. In fact in Japan the total share of oil in energy consumption has decreased from 77% to
50% while that of nuclear power has increased from 1 % to 14%

OPEC nations still account for two-thirds of the world's oil reserves, and, as of March 2008,
35.6% of the world's oil production, affording them considerable control over the global market.
The next largest group of producers, members of the OECD and the Post Soviet states produced
only 23.8% and 14.8%, respectively, of the world's total oil production.

The fact that oil prices are generally expressed in US $ has also created problems for the OPEC This
means that as the prices are denominated in US dollars means that any depreciation of the value of the US
dollar could lead to a loss in real value of oil revenues when used to pay OPEC countries’ imports from
non-dollar countries. As a result the strength of the dollar has an impact on the domestic revenues of the
member nations wealth.

Although during its inception OPEC had somewhat been successful in stabilizing oil prices in the short
term it failed to see that the very nature of the cartel might not be conducive to price stability in the long
run. The use of oil – which is an essential commodity required for the development of any nation , as a
political weapon to rally support has been widely condemned. Moreover the share of OPEC in the world
market has also decline with the discovery and exploration of oil sources in other regions of the world

Priya Bhatter, FYBA

Div A Roll no 12

References:-
www.opec.org/aboutus/history/history.

www.chavezoil..org

www.cges.co/uk

www.opec.org

OPEC-instrument of change –Seymour

History of OPEC- rouhani