OPEC: The Organization That Reshaped Global Energy

Published: April 30, 2026 | 1:51 PM EDT

The Organization of the Petroleum Exporting Countries, known as OPEC, stands as one of the most influential economic organizations in modern history. Founded to coordinate petroleum policies among member nations, the cartel has wielded enormous power over global oil prices and energy markets for more than six decades.

OPEC was established at a conference in Baghdad from September 10-14, 1960, and formally constituted in January 1961 by five founding countries: Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. The organization's headquarters was first located in Geneva before moving to Vienna, Austria, in 1965, where it remains today.

The primary mission was straightforward: prevent major oil companies from unilaterally lowering oil prices and coordinate production policies to ensure stable revenues for member states. Each member retained ultimate control over its own petroleum policy while coordinating with the group on pricing and production matters.

OPEC's membership has expanded and contracted over the decades. After the five founders, Qatar joined in 1961, followed by Indonesia and Libya in 1962, Abu Dhabi (later replaced by the UAE) in 1967, Algeria in 1969, Nigeria in 1971, Ecuador in 1973, Equatorial Guinea in 2017, and the Republic of the Congo in 2018.

Several members have come and gone. Gabon joined in 1975, withdrew in 1995, then rejoined in 2016. Ecuador suspended membership from 1992 to 2007 before withdrawing entirely in 2020. Indonesia suspended membership beginning in 2009, briefly rejoined in 2016, then suspended again. Qatar terminated its membership in January 2019 during a regional blockade to focus on natural gas production. Angola withdrew in January 2024. The UAE's exit on May 1, 2026, marks the latest departure.

During the 1960s, OPEC managed to prevent price reductions but struggled with gradual nominal price declines from $1.93 per barrel in 1955 to $1.30 in 1970. The 1970s transformed the organization into a global powerhouse. In October 1973, OPEC raised oil prices by 70 percent. Two months later, following the Yom Kippur War, prices jumped another 130 percent. Arab members, which had formed OAPEC (Organization of Arab Petroleum Exporting Countries) in 1968, curtailed production and placed an embargo on oil shipments to the United States and Netherlands, the main supporters of Israel during the war.

The result was severe oil shortages and spiraling inflation throughout the West. As OPEC continued raising prices through the decade (increasing tenfold from 1973 to 1980), its political and economic power grew dramatically. Flush with petrodollars, many members launched large-scale domestic development programs and invested heavily overseas, particularly in the United States and Europe.

Oil-importing countries eventually responded by reducing energy consumption, finding alternative sources in Norway, the United Kingdom, and Mexico, and developing coal, natural gas, and nuclear power. In the early 1980s, OPEC members, particularly Saudi Arabia and Kuwait, reduced production in a futile effort to defend posted prices. Production and prices continued falling through the 1980s. Saudi Arabia bore the brunt of production cuts, with oil revenues shrinking by approximately four-fifths by 1986. Revenues across all producers fell by about two-thirds as oil dropped below $10 per barrel. The Iran-Iraq War (1980-88), which pitted two OPEC members against each other, further undermined organizational unity.

Saudi Arabia shifted strategy, deciding it would no longer defend oil prices but would defend market share instead. Other members followed, maintaining production quotas rather than price targets. During the 1990s, OPEC emphasized production quotas. Prices collapsed at the decade's end before rising again in the early 2000s due to greater member unity, cooperation with non-members like Russia and Mexico, Middle East tensions, and Venezuela's political crisis. Prices reached record levels by 2008 before collapsing during the global financial crisis.

Today, OPEC claims its members collectively own about four-fifths of the world's proven petroleum reserves while accounting for two-fifths of global oil production. Saudi Arabia, controlling roughly one-third of OPEC's total reserves, traditionally plays the dominant role in determining overall production and prices.

The organization faces mounting challenges: international efforts to reduce fossil fuel consumption amid climate change concerns, the rise of non-OPEC producers, internal conflicts among members, and the ongoing US-Iran war disrupting Gulf energy supplies. The UAE's departure raises questions about the cartel's future cohesion as global energy markets undergo profound transformation.

Sources: Britannica, OPEC.org, Bloomberg This story is developing.