Vienna, July 9 — The Organization of the Petroleum Exporting Countries today commands roughly 40% of global oil production and holds an estimated 80% of the world’s proven reserves, a position built over six decades of coordinated policy. In 2022 alone, the International Energy Agency estimated that OPEC’s oil export revenues reached approximately $888 billion, underscoring the enormous financial weight the cartel wields.
Yet the group began modestly in 1960 in Baghdad, when five nations — Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela — signed the original pact with the straightforward aim of coordinating petroleum policies to secure fair and stable prices for producer states. That founding act represented a deliberate shift away from the dominance of a small group of Anglo-American firms known as the Seven Sisters, marking a move toward national sovereignty over natural resources that would reshape the global energy landscape.
From Founding to Expanded Alliance
Over the ensuing decades, the cartel grew. By 2024, OPEC counted 13 member countries, each sitting on some of the world’s largest petroleum reserves. A more consequential expansion came in 2016, when the group formed an expanded alliance known as OPEC+.
Ten non-OPEC producers — including Russia, Mexico, and Kazakhstan — joined the framework, further concentrating market power. Together, these nations now control not only a substantial share of production but also the vast majority of proven oil reserves.
This evolution mirrored the broader historical trend: during the 1960s and 1970s, the shift in control allowed producing states to nationalize their resources, and production restrictions in the 1970s caused a sharp rise in prices that had far-reaching effects on the global economy. The cartel functions as a textbook example of a cartel, reducing market competition to obtain monopoly profits.
Pivotal Actions and Market Impact
OPEC’s primary lever remains collective production decisions — cutting or increasing output to influence prices. Some of these actions have been seismic.
The 1973 Arab oil embargo reshaped global politics. The 1986 price war sent crude values crashing. In 2014, the group’s decision not to cut output contributed to a prolonged price collapse.
More recently, during the COVID-19 pandemic in 2020, OPEC+ agreed to deep production cuts that helped stabilize markets as demand evaporated. Saudi Arabia remains the de facto leader of the group, holding the largest spare production capacity in the world — estimated at between 2 million and 3 million barrels per day.
This capacity gives the kingdom outsized influence over the alliance’s output decisions. Since the 1980s, however, the group has faced persistent challenges with price stability; some members have cheated on their production commitments, testing the cohesion of the cartel. The consequences of these collective decisions extend far beyond the oil industry.
Because these nations hold such a large share of proven reserves, their actions directly affect international relations, influencing the cost of energy for consumers and the economic stability of oil-dependent countries. The revenue flows are enormous for member states, and the cartel’s ability to coordinate production gives it a persistent role in shaping global energy markets and geopolitical dynamics.
As the world continues to navigate energy transitions and supply uncertainties, OPEC and its expanded alliance remain a central force in determining the price and flow of the world’s most critical commodity.
