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Inside This Section:
OPEC's Rise to Power
OPEC Price Fixing
OPEC - U.S. Sovereign Status Part 1
OPEC - U.S. Sovereign Status Part 2: Challenges
OPEC's Influence on the U.S.
Prior to the establishment of OPEC, the international oil market was controlled by seven huge oil companies, somewhat derisively termed the “Seven Sisters”, composed of the following companies, along with a ‘where are they now’ accompaniment:
Royal Dutch Shell is known in the US by its subsidiary, Shell Oil Company
Anglo-Persian Oil became British Petroleum, merged with Amoco and is today known simply as BP
Standard Oil of New Jersey was known as Esso, merged with Mobil and is now part of ExxonMobil
Standard Oil of New York later turned into Mobil, now ExxonMobil
Standard Oil of California became Chevron
Gulf Oil was involved in what was then history’s biggest merger in 1985, mostly with Chevron
Texaco merged with Chevron in 2001 and continues as a Chevron brand
For much of the 20th century, the sole world oil authority was the United States, and its government regulated oil prices, keeping them relatively stable. As the demand for oil grew, nations such as Saudi Arabia and Iran were exporting crude oil to these companies, only to buy it back at higher prices. This unfair system chafed the oil-rich countries, expressed famously by the Shah of Iran in 1973 during the Arab oil embargo :
“You [Western countries] buy our crude oil and sell it back to us, refined as petrochemicals, at a hundred times the price you've paid to us … It's only fair that, from now on, you should pay more for oil.”
In 1960 the 1st OPEC Conference was held in Baghdad with Iraq, Iran, Kuwait , Saudi Arabia and Venezuela in attendance. Initially, the organization aimed to do little more than get a bigger piece of oil profits and secure more control over its own oil production. Over the next decade OPEC added a handful of other member nations, but its rise to power would not truly arrive until 1973.
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