Chapter 4 . About OPEC
Finally, let’s discuss
the Organization
known as OPEC
The Organization of the Petroleum Exporting Countries (OPEC) is an
intergovernmental organization
currently made up of twelve oil exporting
countries that work together to coordinate their petroleum policies.
The Organization was formed in response to the activities and practices of seven
large international oil companies (IOCs) known as the “Seven Sisters”. The activities
of these IOCs were often detrimental to the growth and development of the oil-
producing host countries, whose natural resources they exploited.
The first move towards the establishment of OPEC can be traced
back to 1949, when Venezuela approached four other oil-
producing developing countries—Iran, Iraq, Kuwait and
Saudi Arabia—to suggest that they explore avenues for
regular and closer cooperation on oil matters.
But the main impetus for OPEC’s birth came a decade
later, after the IOCs had decided to reduce the price of oil
without first asking the governments. In response, several
oil-producing countries decided to hold a meeting in
Cairo, Egypt, in 1959. This was the First Arab Petroleum
Congress. Iran and Venezuela were invited as observers.
The meeting adopted a resolution asking IOCs to
consult the governments of oil-producing countries
before changing the posted price of oil. But the
IOCs ignored the oil-producing countries. And in
August 1960, they once again lowered the price of oil.
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