Oil and Geopolitics in the 1970s and 1980s: OPEC’s Boom and Bust Eras

Abstract

The purpose of looking back into the history of the Organization of Petroleum Exporting Countries (OPEC) is for understanding the mechanism that lead to its failure in managing the world’s petroleum market since the year 1973 when it took over the responsibility of setting oil prices from the group of international oil companies (IOC) known as the Seven Sisters. As discussed in the opening chapter, understanding the history of OPEC is important to understand its current situation and the future direction of its policies under the current market realities. The years between 1973 and 1986 witnessed a series of trial and error for OPEC with more failures than success in managing the organization’s affairs and the world petroleum market. OPEC took over a world petroleum order that was in a long state of stability in the period prior to 1973 under the former structure of the Seven Sisters (Esso, Mobil, Gulf, Shell, BP, Texaco, and Socal). Since OPEC members started nationalizing their oil industry, it was never capable of putting a strategy that can prevent crisis and ensure the stability of the oil markets. Additionally, it was never possible for OPEC to preside over the world petroleum order in the same way as the IOCs who were engaged deeply in a system of cooperation and sharing of producing assets mainly in the upstream.