OPEC also formed an extended cartel with nine other nations including Russia called OPEC+
It was for the first time in 1973 that this cartel of oil-producing nations brought the American economy to its knees.
Formed almost 60 years ago today, the Organisation of the Petroleum Exporting Countries (OPEC) was created in Baghdad on September 14, 1960, to counter the power of seven US and British oil companies.
More recently, it has continuously fallen prey to the pressure from Washington to pump more oil. This has been the recurrent theme since US President Donald Trump assumed office at the start of 2017.
The strings came undone when prices got too low for US drilling companies to make money this year. It was then that OPEC hashed out a deal to raise prices back up slightly, in an agreement spurred on by Washington's threat to reduce its military backing for Riyadh, sources told Reuters.
Here's a brief rundown on OPEC on its 60th anniversary:Who does OPEC comprise of?
In 1960, the first founding countries were Iraq, Kuwait, Saudi Arabia and Venezuela. Joining in succession after were Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007), Equatorial Guinea (2017) and Congo (2018), according to its official website.
Saudi Arabia for the longest time has been the leading OPEC producer. Iran and Venezuela, which founded OPEC along with Iraq, Kuwait, and Saudi Arabia, had routinely opposed any moves to bring oil prices down in the face of US pressure. The duo have been the most hawkish members of the cartel.Saudi Arabia's growing dominance
According to one Reuters report, the increased dominance of Saudi Arabia within OPEC has also come at a time of higher US oil and gas production, which has turned the United States into the world's biggest petroleum producer and slashed its dependence on foreign fuel.What is OPEC's relationship with the US: its biggest competitor?
In comparison to the cartel, US's oil production had soared. Data from Energy Information Administration (EIA) showed that American oil production had doubled in a decade to reach over 12 million barrels a day in 2019.
In fact, OPEC's own data showed that while the US oil market doubled since 2010, its own had fallen.
OPEC also formed an extended cartel with nine other nations including Russia called OPEC+. According to a senior Trump administration official, the collective influence OPEC+ had waned in comparison to the US.
The same report also suggests that Trump engaged with OPEC more actively than other sitting presidents, by often sharing his comments on production decisions and oil price moves on Twitter.
President Trump also shared a very close connection with Saudi Arabia's ruler Mohammed Bin Salman, or MBS. Saudi Arabia is reliant on the US for weapons and protection against regional rivals such as Iran.OPEC: The presentAfter oil prices had tanked because of a supply glut caused by a price war between Saudi Arabia and Russia, which coincided with the collapse in demand due to worldwide coronavirus lockdowns, Trump asked the oil-cartel to cut production, in a move to boost business for US oil companies.
In fact, OPEC agreed and on April 12, OPEC+ agreed to a record cut in production equivalent to a 10th of global output.
Rifts appeared as early as 2011, when Libyan output was hit by the uprising against Muammar al-Gaddafi. At the time Saudi Arabia had urged its fellow member states to lower prices. However, Algeria, Angola, Ecuador, Iran, Iraq, Libya and Venezuela all resisted.
Qatar quit in 2019, partly due to a political row with Riyadh. Another small producer, Ecuador, left this year and Indonesia departed in 2016.
While others that may be unhappy with OPEC's trajectory, they plan to remain with the group so they can still have a say.
As one source familiar with Iran's oil policy put it: "It's important to be a member of OPEC or OPEC+ so that you can maximise your interests."
(With inputs from Reuters)