Today’s Topic :- OPEC + History + International relations + Oil Market + Market related + Countries
| Article By Amit Kumar [ mydatawords.com ] | updating on Sept 16, 2020 |
Hi, friends today’s i ‘m sharing information about oil market related information for you and also discussion about OPEC role. [ In briefly ]
The first opportunity for OPEC to flex its collective muscle came with the outbreak of the Arab-Israeli war of 1973. When Egypt invaded Israel to start the war, OPEC took the decision to place an embargo on the United States and its allies that supported Israel Known as the 1973 Arab Oil Embargo, it is often referred to as “the first oil shock.” Prices quadrupled from USD 3 per barrel to nearly USD 12 globally from September 1973 until March 1974 when the embargo was finally lifted. And four more members joined Qatar, Indonesia, United Arab Emirates and Algeria. It wasn’t too long before OPEC began to play a prominent role in global oil markets and international relations.
After the embargo, it was decided by OPEC that instead of driving prices up, which discourages consumption and encourages investment in alternative sources, it would be best to adopt a strategy that works to stabilize prices. This would guarantee a regular supply of oil to consumers, but also a steady stream of income to the producers. Ironically, this strategy seemed to go out the window starting in 1979 as oil prices skyrocketed and later collapsed like a house of cards in the mid-80s.
Although the 1979 Energy Crisis was not of OPEC’s doing, it certainly benefited most members of OPEC. Oil production in Iran halted during the Iranian Revolution in 1979 and the outbreak of the Iran-Iraq war that followed the next year. Sometimes referred to as the “second oil shock,” the 1979 Energy Crisis actually only decreased global oil supply by around 4%, as other OPEC members increased supply to benefit from the skyrocketing prices.
OPEC’s rise to power and prominence in global oil markets as well as international relations occurred during the 1970s. With OPEC’s emphasis on exercising national sovereignty over natural resources, member countries took control of their domestic petroleum industries and together began to have a major say in the pricing of oil in global oil markets. [ the peak of OPEC power in 70s ]. However, widespread panic in markets seemed to be the real catalyst for the price increase. The price of oil doubled to about USD 40 per barrel during this time period, a level that was not to be exceeded for another 10 years.
Thank you for reading….
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