50 Years of OPEC and Politics

Representatives of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela came together in September 1960 to find a way and prevent repeated decline in oil prices announced by big oil companies. The meeting gave birth to Organization of Petroleum Exporting Countries (OPEC) some half a century ago. the organization was a political reaction to an economic stimulus because oil revenues had turned into the most important source of power and legitimacy for oil-rich countries. Representatives of member states make decisions about output ceiling of the organization and members’ quotas, thus determining price of a vital international commodity. Since consumption of oil and energy is a basic component of wealth generation and because wealth and economy are necessary conditions for power and security, there is a fundamental link connecting oil, wealth, power, security and politics. Considering its huge capacities in terms of energy reserves, production, exports, and surplus output capacity, OPEC has turned into one of the most effective organizations in international political economy during the past 50 years. This paper studies interaction between this organization and other political and international variables through an international political economic approach using a descriptive – explanatory method. Findings show that for OPEC decisions to have optimal effect, they should keep a wise distance form power and politics. The same findings also prove that optimal performance of the organization is a function of the distance between its decisions and power and politics. Therefore, assessment of opportunities and threats in the past half a century can provide good grounds for the formulation of efficient strategies to increase efficiency of OPEC in the next half a century.