Cooperation Among Oil Exporting Countries with Special Reference to Arab Countries: a Political Economy Analysis

Abstract

The Organization of Petroleum Exporting Countries (OPEC) will probably be remembered in history as an outstanding example of relatively successful intergovernmental cooperation among developing countries. OPEC's achievements in raising the oil export income of members appear remarkable in view of the deep sociopolitical divisions among them—occasionally verging on armed conflicts. Nevertheless, OPEC countries have managed not to let these conflicts wreck their common interest in obtaining substantially better terms from the international companies and from consumer countries. That OPEC countries could obtain better terms is not only the result of member solidarity but also of the relatively inelastic demand for petroleum. Another crucial factor favoring OPEC is that major consumer countries have been moderate in their drive to collectively countervail OPEC, except indirectly by allowing their international oil companies to join forces ostensibly in defense of consumers' interests. Major consumer countries have also declined so far to split forcefully the OPEC coalition. The continued existence of OPEC largely depends on (1) members' perception of gain outweighing sacrifices or frustrations of working together, and (2) the tolerance of major industrial importing countries.