OPEC is the acronym for the “Organization of the Petroleum Exporting Countries”. It was established in 1960 with the mission and vision of unifying the world’s biggest oil producers in the midst of an oil crisis. At the time, Western oil companies were bullying countries to lower their oil prices. The countries banded together, to form a united front through general policies and coordinated pricing schemes. Not only does this protect the countries’ right to get a fair price for their crude oil, it also prevents industrialized countries from buying it at lowest rates and selling it to others at an outrageous profit.
In the early years OPEC was just made of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The ranks have since expanded to include Algeria, Angola, Indonesia, Libya, Nigeria, Qatar, and United Arab Emirates or UAE. Together, these countries supply about half of the world’s oil needs and control about two thirds of the world’s known oil reserves.
Considering the world’s dependence on oil, OPEC wields a great deal of influence even in the political and economic realm. For example, OPEC’s decision to cast an oil embargo on the United States in the 1970’s—in response to its support of Israeli forces in the Yom Kippur War—literally brought the American life to a halt. The country was forced to do oil rationing, and people could only use their cars on certain days. Car manufacturers had to develop more fuel efficient cars. Even when the embargo was lifted, the effect on the American economy was already deep, and oil prices were still volatile.