OPEC, the Organization of the Petroleum Exporting Countries, was formed in 1960 by five leading oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The organization aims to co-operate and influence the global market to maximize profits for its members. OPEC has since grown to 13 member countries, including Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates, and Venezuela. However, Ecuador, Indonesia, and Qatar are former OPEC members.

 

OPEC has an estimated 44% of global oil production and 81.5% of the world's proven oil reserves, making it a major influencer of global oil prices. In the 1970s, oil production restrictions led to a rise in oil prices and revenue for OPEC, which had far-reaching consequences for the global economy. The organization began setting production targets for its member nations in the 1980s, with reduced targets leading to increased oil prices.

 

OPEC's formation marked a turning point toward national sovereignty over natural resources, leading to its decisions playing a prominent role in the global oil market and international relations. However, OPEC has also been characterized as a textbook example of a cartel that cooperates to reduce market competition, although consultations among its members are protected by the doctrine of state immunity under international law.

 

OPEC has had a limited impact on world oil supply and price stability since the 1980s due to frequent cheating by members on their commitments to one another. Political scientist Jeff Colgan found that members have cheated on 96% of their commitments, mainly because OPEC does not punish members for non-compliance with commitments.

 

The OPEC Conference is the supreme authority of the organization, consisting of delegations headed by oil ministers of member countries. The chief executive of the organization is the OPEC secretary general. The conference generally operates on the principles of unanimity and "one member, one vote," with each country paying an equal membership fee into the annual budget. Saudi Arabia, the largest and most profitable oil exporter in the world, serves as "OPEC's de facto leader."

 

In conclusion, OPEC has come to play a major role in the global oil market, although its impact has been limited since the 1980s due to frequent cheating by members on their commitments to one another. Its formation marked a turning point toward national sovereignty over natural resources, leading to the restructuring of the global system of oil production in favor of oil-producing states. OPEC's decisions have far-reaching consequences for the global economy and international relations, and its formation has had a significant impact on the global oil market.