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OPEC The Organization Of Petroleum Exporting Countries Term Paper

OPEC The Organization of Petroleum Exporting Countries (OPEC) is a cartel that was formed in 1960 with an initial membership consisting of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The background milieu is that the world was in a state of decolonialisation at the time. The world oil market was dominated by seven major oil companies, all from developed nations, while the OPEC nations were all developing nations. The birth of OPEC, therefore, reflected an interest by oil-producing nations to "exercise permanent sovereignty over their natural resources in the interest of their national development" (OPEC, 2012). Several other nations would join OPEC over the coming years, including Qatar, Indonesia, UAE, Libya, Algeria, Nigeria, Ecuador and Gabon. Angola would also join, much later, while Gabon, Indonesia and Ecuador would later withdraw from the cartel (OPEC, 2012).

The 1970s were a period of growth and maturation...

The market for oil became much more volatile, and oil became a geopolitical tool for the OPEC nations. Two critical events -- the Arab oil embargo and the Iranian Revolution -- would characterize this volatility. These crises empowered the OPEC nations. They undertook steps to aid poorer nations and would establish the OPEC Fund for International Development in 1976. The oil embargo lasted for one year during which the price of oil nearly quadrupled. This event also showed to the world the vulnerability of the United States to foreign oil and its weak energy supply chain in general. It also showed OPEC that oil could be used as a political tool (State Department, n.d.). It would later use this in other future conflicts as well.
In the 1980s, oil prices crashed by mid-decade. There was a glut of oil on the market as consumers reduced their fuel consumption in response to the high prices and volatility of…

Sources used in this document:
Works Cited:

OPEC. (2012). Brief history. Organization of Petroleum Exporting Countries. Retrieved December 4, 2012 from http://www.opec.org/opec_web/en/about_us/24.htm

US Department of State. (no date). Milestones 1969-1976. U.S. Department of State. Retrieved December 4, 2012 from http://history.state.gov/milestones/1969-1976/OPEC
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