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Will the OPEC take over the world? May 26, 2009

Posted by mytruthaboutoil in Geostrategy, Oil (general), Oil giants, Oil prices.
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03_opecThe Organization of the Petroleum Exporting Countries (aka OPEC) is a cartel of oil producing countries, gathering 14 of the worlds most important oil exporting countries.

The aim of this powerful organization is to influence oil prices through oil production’s regulation. Therefore, any decision taken by OPEC has a decisive impact on oil market.

OPEC myth really started with the 1973 oil crisis. OPEC members, which were mostly arab countries, decided  to react after the Kipour war between Egypt and Israel and chose to dramatically raise oil prices and to set an embargo against Western countries which supported Israel. outrageous rise of oil price and now seems unable to limit its fall. That shows well enough that OPEC does not any more control oil market.

Oil prices quadrupled in five months, provoking a worldwide recession and generating the myth of an almighty organization able to destabilize Western economies for political purposes.

 
 
 
 

 

OPEC members' contribution

OPEC members' contribution

 

 

 

 

 

The end of a myth

However, times have changed and OPEC now faces many problems.

More and more oil is discovered everyday in various parts of the world, notably in countries which are not members of OPEC. Therefore, the cartel is struggling to efficiently control an increasingly globalized oil market.

Today, OPEC member countries produce only 40% of world oil production, eventhough they still sell 70% of the oil sold on the international market and gather almost 80% of the estimated oil reserves.

But OPEC appeared powerless to face  last years outrageous rise of oil price and now seems unable to limit oil prices’ fall. This proves well enough that OPEC is not anymore able to set oil prices and dictates its will to the world.

 

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