Survival of OPEC and Saudi–Iran Relations—A Historical Overview

Abstract

In their attempt to stay the tide of falling oil prices, in November 2016, the Organization of Petroleum Exporting Countries (OPEC) producers decided to cut back output with some members, notably Iran, being exempted from the scheme. The collective decision had the approval of Saudi Arabia at a time when its decades-old rivalry with Iran was escalating into bloody proxy wars, at least partly financed by the two governments’ oil revenues. As such, the hostility between the two countries had cast doubt on OPEC’s power of effective intervention in the oil market and even its very survival. Yet, not for the first time in its history, the organization escaped the fate of many similar associations of states which have fallen victim to internal political squabbles. What has been the secret of the survival of this particular entity and what lessons it may have for preserving existing international associations of nations? This article discusses these questions in the light of the history of OPEC and relations between Saudi Arabia and Iran as rival regional powers and founding members of the organization.