OPEC is more than just a meeting of diplomats in Vienna. This has been the mechanism for determining the price of your gas since 1960.
OPEC was born in Baghdad. Iran, Iraq, Kuwait, Saudi Arabia and Venezuela started it. They wanted control. Until then, Western oil companies had set the conditions. After that, OPEC tried to set them.
The membership list changed like sand. Qatar joined in 1961 but withdrew in 2019. Indonesia joined in 1962 got suspended in 2009, came back in 2016 but suspended again later that year. Libya and Algeria joined in 1962 and 1967. Nigeria joined in 1971, Ecuador joined in 1973, left in 1992, rejoined in 2007 and left in 2020. Gabon and Equatorial Guinea joined, left and rejoined. The Republic of Congo joined in 2018. Angola joined in 2007 but announced it would withdraw in 2023.
Decisions are not made by majority vote. They need consensus. The head office is located in Vienna, Austria. However, its strength lies in the members’ production quotas.
The real shift happened in 1973. Western countries supported Israel during the Arab-Israeli war. OPEC retaliated. They raised prices. Member countries’ incomes rose sharply. The geopolitical leverage was undeniable.
But that dominance didn’t last forever.
Internal dissent fractured the unity. Alternative energy sources have started to appear in Western countries. Non-OPEC countries began to exploit their own oil reserves. The market diversified. OPEC’s grip has loosened.
Today, the math is stark. OPEC countries supply about two fifths of the world’s oil consumption. They hold about two-thirds of the world’s proven reserves. This is huge leverage. However, leverage requires adjustment. Coordination is difficult when member countries have conflicting national interests.
How does this affect your wallet? It doesn’t happen in a vacuum. Supply shocks in the Middle East ripple through global markets. If OPEC cuts production, prices will rise. When they flood the market, prices drop. This cycle repeats itself.
The influence of the organization is still strong. However, this is not absolute. The landscape has changed. Renewable energy is no longer just a buzzword. It’s a market force. Non-OPEC oil producing countries, such as the United States, have reshaped the supply chain.
So is OPEC obsolete? No. It’s adapting. However, the era of unilateral price controls is over. The market is even more complex. More fragmented. More resilient to single-point failures.
What remains are powerful bloc with deep pockets and deep roots. They don’t control everything. But they still control a lot.
And that matters.
