Established by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela in 1960, the Organisation of Petroleum Exporting Countries (OPEC) celebrates its 60th anniversary this year, as it remains a pivotal part of the oil industry. Today, OPEC consists of 13 members; Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, UAE and Venezuela.
Here are some of the organization’s major milestone during its past decades of perseverance:
Adopted in January 1961, the statute aims to ensure a secure, safe and fair oil industry.
OPEC Headquarter moved to Vienna
The move of OPEC’s HQ to Vienna, Austria on September 1, 1965 serves as a symbol for the strong and lasting ties between OPEC and Austria.
First OPEC Summit
The first OPEC summit took place in Algiers in 1975 and aimed to establish the organization’s guidelines.
Prices Crash in the 80s and 90s
OPEC’s revenue began declining as prices weakened in 1986 due to excessive oil production that did not match the low demand. This led to economic hardships for OPEC members. However, OPEC was quick to act and introduced a Reference Basket for pricing as well as a group production limit divided among OPEC members. OPEC continued to make advances that matched the breakthroughs happening in the 1990s and sought a more fair and realistic approach towards the oil supply.
Price Band Mechanism
In the 2000s, OPEC adopted an innovative price band mechanism with band range $22-$28 which led to a drastic increase in crude oil prices. Even though crude oil prices reached as high as 50$ per barrel, OPEC was more focused on creating a sustainable and secure oil market for both producers and consumers and thus eliminated the price band mechanism in early 2005.
June’s History Meeting
A meeting was held between OPEC and the EU in June 2005 to reinforce cooperation and transparency. At the meeting, OPEC was represented by Nigeria, Kuwait and Alternate President of the OPEC conference, HE Dr. Edmund Maduabebe Daukoru. From the EU’s side, Luxembourg, the Netherlands, the United Kingdom and the European Commissioner attended.
The 2007 World Oil Outlook
OPEC released its 2007 World Oil Outlook as a way to pledge its commitment to a secure and stable oil market.
2008 Financial Crisis
Just as the oil prices were surging, the 2008 global financial disruptions caused prices to collapse. As a way to support the oil market, OPEC turned to establishing stable and sustainable development in its second and third summits in Caracas and Riyadh.
OFID was established so that OPEC can help developing countries realize their goals in terms of economic and social development. The fund aims to impact and change the lives of the poor by investing in health care, education, sanitation and many other important resources. However, the OFID encourages decisions to be made by the beneficiary people and government while working closely with them and offering the needed support.
With a history in developing environmental projects, OPEC has invested billions in flared-gas recovery projects, in which it has contributed to the reduction of the amount of gas emitted during oil production. OPEC has also participated in many workshops and seminars addressing climate change. Most importantly, OPEC member countries announced during the Third OPEC Summit in Riyadh, Saudi Arabia, that a 750M dollar fund will be invested in clean technology.
Uncertainties and Risks - 2010
The last decade has been one filled with uncertainties and risks for the oil market. As many parts of the world faced social and economic unrest, the supply and demand was heavily impacted. With the world continuing to focus more on the severity and importance of climate change, OPEC had to look for ways to enhance the stability of the oil market.
The Algiers Accord was the first step in establishing the collaboration between OPEC and non-OPEC members as well as setting the foundation for the negotiations of the Declaration of Cooperation.
The Declaration of Cooperation - OPEC+
One of the most important milestones for OPEC was when OPEC and non-OPEC oil producing countries joined forces in the Joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on December 10, 2016. The Declaration of Cooperation aimed to further stabilize the oil market by following voluntary production adjustments. With non-OPEC countries, this Declaration continues to be extended in order to ensure a stable, efficient and secure global oil market.
The outlook first published in 2007, serves as a reference tool to understand the market and demonstrate OPEC’s commitment to a sustainable and stable oil industry.
Charter of Cooperation
As a way to adopt a greater degree of transparency, all OPEC members and oil producing countries have established the Charter of Cooperation in 2019 as a way to enhance exchanging ideas about developments and opening dialogues.
Lowest Ever Oil Prices
Following the lockdowns and travel restrictions due to the COVID-19 outbreak in 2020, oil demand drastically declined, causing a severe drop in prices. However, with the demand plummeting, the fear of where to store excess fuel led prices to reach negative values between April 20 and April 22. In an attempt to support prices, OPEC and allies have significantly cut oil production by 7.7M barrels per day, this reduction is expected to last until December.
By Sama Al Kurdi
Sama Al Kurdi is an Industrial Engineer who is passionate about the business and tech scene in the MENA region.
© 2000 - 2021 Al Bawaba (www.albawaba.com)