Opec Is An International Organization

They formed the Organization of the Petroleum Exporting Countries, or OPEC. Since the OPEC was instated to protect the interests of oil producers, it could be seen as an example of regional integration. The OPEC is widely considered, throughout the world, as a cartel. This would be an intellectual misconception. The concept of cartel would consider oligarchies limiting competition and monopolies increasing prices. Oppositely, many international oil producers are not members of the OPEC. These non-members saw a fourfold increase in the oil prices, during the 1973 oil embargo. In A history of the modern Middle East, William L. Cleveland and Martin Bunton stated that the immediate objective of the OPEC was “to utilize the collective bargaining power of its member states to pressure the Western oil companies to increase oil prices.”. However, the birth of the OPEC did not occur, overnight. In 1947, the Venezuelan and Iranian delegations held talks in Washington, to coordinate their oil policies. In OPEC: Past and Present, Abdul Amir Q. Kubbah stated that the Arab league had a project of creating an “association of Arab oil-producing countries.”, since 1945. The first OPEC-type grouping occurred in 1953, when Iraqi and Saudi delegates joined forces. The agreement between these two states was the first to involve cooperation from both governments. The Arab League held a summit in Cairo, in 1959. During that summit, “views have been exchanged concerning the

The Organisation of the Petroleum Exporting Countries (OPEC) aims to coordinate and unify the petroleum policies of its Member Countries and ensure the

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

Why should we worry about OPEC? Why do we need to get away from foreign oil? OPEC controls the oil prices on the world market. They can raise oil prices to benefit their bottom line. Last November crude oil prices went up 48 cents because Nigerian militants attacked a pipeline affecting oil production (“Oil Prices Find Floor”, n.d). It 's hard on Americans when the oil prices rise and it would be even harder if our foreign oil producers decided to stop trade with us. Not only would we be in danger of not being able to satisfy our wants, but our basic needs such as driving to work could be in danger. That is why this issue is a current geopolitical challenge for the United States.

Our world economy depends upon petroleum; petroleum, in fact, has shaped the modern world. It has dictated production technologies and methods. It has facilitated the emergence of a worldwide transportation network. It has allowed cites to grow and expand, and determined the spatial landscape of regions. Due to our great need for petroleum, the scope of OPEC¡¦s power surpasses our prowess as an economic superpower, considering OPEC regulates the output and the price of oil from their reserves.

Being at the centre of global economic activities, the U.S. has had its own fair share of oil price shocks. However, it did not just accept or try to change or distort the market forces behind oil prices. Rather, it sought to influence them by making supreme the goal of energy independence. It also intensified diplomatic efforts and negotiations to this end.

Oil has been a coveted resource since the early twentieth century. Global oil powers are a major component of the world economy. For this reason predominant oil producers have experienced numerous power struggles and violent outbreaks over the years. Due to the newfound independence of many Middle Eastern countries in the 1960s, many rich oil fields were accessed for the first time, providing new competitors for the hegemonic American "Seven Sisters." Tensions rose between the United States and many Middle Eastern countries not only as a result of competition, but also due to several oil-related wars that broke out in the region. The years that encompassed the strained relationship between the U.S. and OPEC-involved countries proved to be a

As a form of retaliation the Arab countries members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States, this was also extended to other countries supporting Israel like Portugal, the Netherlands and South Africa.

Organization of Arab Oil Exporting Countries (OAPEC) consisting of 12 countries: Algeria, Angola, Ecuador, Iraq, Libya, Nigeria, Qatar, United Arab Emirates, Venezuela, Iran, Kuwait, and Saudi Arabia. On October of 1973,

According to current estimates, more than 80% of the world's proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to around 66% of the OPEC total (OPEC Share of World Crude Oil Reserves, 2014). Competition amongst the U.S. and the Middle East has never reached this level before. There is a constant tension between the two countries and refuse to collaborate in dividing the market share equally. Furthermore, as both nations refuse any bipartisan agreement, there is no limiting the production of oil. Each nation is looking to drive out competition by any means. What they don’t realize is if they cooperated and reached an agreement amongst the international community, oil will remain profitable just as it was a few years ago. Though, this is unlikely to happen any time soon, but will eventually cause Saudi Arabia and other Middle Eastern countries to take a drastic decision when their main source of capital plummets due to the current price of oil. Profits are no longer seen in the oil industry. The Price of oil has been selling at around $50-$60 per barrel, not enough to cover production cost. The United States is able to withstand any contraction within the oil sector, as their financial portfolio is diversified, not solely reliant on the price of

In 1973, Arab states and Israel were in the midst of war. In retaliation of the U.S. resupplying Israeli military, Arab members of the Organization of Petroleum Exporting Countries (OPEC) initiated an embargo against the United States and other countries that supported Israel. This embargo banned petroleum exports to certain countries, introduced cuts in oil production, and had a drastic effect on the U.S. economy (Oil Embargo, 1973–1974). It led to quadrupling oil prices and oil shortages that led to a widespread crisis across the United States and other countries facing the embargo. The crisis caused a global realization that the world seemed to be running out of oil and provided incentive to look to alternative energy

market, either as makers, customers, or both. In 2008, oil gave around 34% of the

The Organization of the Petroleum Exporting Countries (OPEC) was created in 1960 and has consisted of approximately 14 changing members over the last 55+ years. In 1960, five oil-producing countries formed the core of OPEC

Saudi Arabia has an economy that is largely dependent on oil, with the government maintaining the biggest control over the country 's significant economic activities. Saudi Arabia owns about 16% of the global oil reserves and is the number one exporter of oil (Saudi Arabia, 2013). In addition, the Kingdom of Saudi Arabia was instrumental in the formation of the OPEC (Organization of the Petroleum Exporting Countries) group, which initially comprised Iraq, Venezuela, Iran, Kuwait and Venezuela (Energy indicators, 2004). Currently, the petroleum industry constitutes about 80% of the country 's budgetary incomes; about 40% of the country 's GDP and 87% of Saudi 's export earnings. Agriculture, in addition to petroleum products, has been a major contributor to the kingdom’s economy since 1970s (Saudi Arabia, 2013). The country has been able to produce enough agricultural products for their consumption as well as surplus for exportation to the GCC member countries.

It’s a particularly noteworthy development when oil prices are down by 50%. During the past decade, the price of oil has traveled from $60 per barrel to its peak of $146 during 2009, then in 2015 it fell into a steep decline again to below $50. Since oil is sold in a global market, the increase or decrease of its price has a tremendous impact on all economies throughout the world. This research goes in depth on how the shift in oil prices has affected Saudi Arabia and the US’s economies, the world’s biggest oil producers. The issue will be broken down to three components; a brief summary of the laws and regulations that possibly affected the change in oil prices, how it is currently affecting the US and Saudi Arabia’s economies, and their quest for alternative solutions. The purpose of this research is to analyze how both the United States and Saudi Arabia have been affected and what progressive measures they are willing to take in response to the steep decline of oil prices.