OPEC

Lore & Background

OPEC was founded on 14 September 1960 in Baghdad by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its formation marked a turning point toward national sovereignty over natural resources, as it enabled oil-producing states to nationalize production and structure prices without punishment by Western governments and firms. Prior to OPEC, states that altered oil production arrangements faced military or economic coercion, such as the 1953 US-UK sponsored coup in Iran after its government nationalized oil production.

Reader's Guide

OPEC's significance lies in its role as a cartel that coordinates oil production to influence global prices, though its effectiveness has been limited since the 1980s due to frequent cheating by members on commitments. Political scientist Jeff Colgan found that members cheated on 96% of their commitments between 1982 and 2009, and that compliance often reflects what members would do without OPEC. The organization has been characterized by economists as a textbook example of a cartel, but OPEC members describe it as a force for market stabilization. OPEC has not been involved in World Trade Organization competition disputes, and US court decisions have protected its consultations as governmental acts under the Foreign Sovereign Immunities Act. Conflicts such as the Six-Day War, Yom Kippur War, Iranian Revolution, Iran–Iraq War, and others have periodically disrupted supplies and elevated prices.

Did You Know?

• OPEC accounted for 38 percent of global oil production in 2022.
• 79.5 percent of the world's proven oil reserves are located within OPEC nations.
• Saudi Arabia serves as OPEC's de facto leader due to its status as the largest and most-profitable oil exporter.
• The United Arab Emirates left both OPEC and OPEC+ in 2026.