OPEC & OIL SHOCKS; THE PATHOLOGY OF OPEC'S BEHAVIOR IN GLOBAL OIL MARKET

After Second World War, demand for oil increased and in 1970s reached to its maximum growth. And naturally, providing this level of demand depended on much more import from OPEC, especially from Middle Eastern members. Contemporaneous, in the early 1970s, some OPEC governments stopped granting new concessions and starting to claim equity participation in the existing concessions, with a few of them opting for full nationalization. These two processes led to the introduction of new powerful actor to global oil market.But, as the further events showed, OPEC's dominance had a short life and because of some reasons, chiefly as a result of OPEC's behavior after second oil shock (1979), this period shortly finished. In the mid 1980s, it's pronounced that the OPEC's formal prices catch to trouble. Under these pressures, the demand for OPEC oil declined from yearly average 30 million barrels per day (mb/d) in 1979 to yearly average 16 million mb/d in 1985. With this continued decline in demand for its oil, OPEC saw its oil market share in the world's oil production fall from 52% in 1973 to less than 30% in 1985. In 1986, when OPEC tried to increase its oil exports, to reach to its previous market share, the shock occurred and prices fall downed from 29 $ per barrels to less than 10 $. In fact, after oil crises in 1986, OPEC's pricing system collapsed and replaced with a pricing system on the base of market mechanism. So, the role and position of OPEC weakened in global oil market in the mid of 1980s.In this article, with studding OPEC's behavior between first and third oil shocks (1973-1989), we try to analyze the effect of OPEC's policies on the weakness of its role in the global oil market.