The power of Opec

Oil production: The power of OPEC - at Moneyweek.co.uk - the best of the week's international financial media.

Why was Opec created? Opec was created at a conference in Baghdad in September 1960 to protect the interests of oil-producing countries. At that time, the Arab oil fields were controlled by multinational conglomerates who had picked up the rights to virtually every drop of Middle Eastern oil for next to nothing in the wake of World War I. These so-called Seven Sisters were able to raise and lower the oil price as they saw fit. In 1960, faced with a glut of oil, the oil companies lowered oil prices unilaterally, thereby reducing the amounts that the producers received in taxes and royalties. Five of the oil producers - Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - came together from a position of weakness to demand higher prices. By 1971, six other countries had joined: Indonesia, Qatar, Libya, Nigeria, Algeria and the United Arab Emirates.

How powerful was Opec?

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