The older of us have bad memories of the Organization Petroleum Exporting Countries, founded in 1960 in Baghdad by Iraq, Iran, Kuwait, Saudi Arabia and Venezuela. Algeria, Indonesia, Qatar, Libya, Nigeria and the United Arab Emirates will be added later. Ecuador and Gabon are only temporary members. The reason for the establishment of OPEC are the two unilateral lowering of the list prices for crude oil within a short period of time. It is dominated by the multinational oil companies. Since 1968 there has even been an OAPEC especially for the Arabian producers, who mainly financed the boycott after the lost Yom Kippur war in 1973. These are the resolutions that had a decisive effect on us.

At this point in time, the organization finally expanded its previous objective, namely to secure the livelihood of the individual producers through the oil prices, among other things by keeping fluctuations in prices as little as possible. Although everyone has formally the same voting rights, it was almost more about setting quotas than prices, fixed to a barrel (picture above) of 169 liters. In addition, the different quality depending on the area of origin was also included.

The reason why the organization was able to push through massive price increases in 1973 after the fourth Israeli-Arab war and the 1981 revolution in Iran and the subsequent war with Iraq was the enormous increase in consumption in the industrialized countries. However, significant savings were made as repercussions. In addition, the OPEC is being forced by other players in the oil market such as Great Britain, Norway and Mexico to cut production through artificially allocated quotas.

This only works to a limited extent because these quotas are often exceeded subliminally. The temporary decline in production in the countries of the former USSR could have helped. But production has also increased with the successful fracking of oil in the USA, for example. In the meantime, according to Wikipedia, the area of impact has been increased through agreements with countries such as Russia, Kazakhstan, Mexico and Oman (OPEC +). Together with Russia, Saudi Arabia is one of the largest exporters.

Despite further promises made by politicians, the demand for crude oil will remain unbroken for a long time to come. It is expected that demand after the pandemic will be greater than supply by 2022 at the latest. The increasing demand for electric cars cannot change that much, especially since we have to wait and see how it develops when the subsidies run out. And as you know, it is not the production of oil that will ever go to zero, but rather the price for it will keep increasing.