OPEC

OPEC is the Organization of the Petroleum Exporting Countries. OPEC was founded in 1960 by Saudi Arabia, Iran, Iraq, Kuwait, and Venezuela. Other mostly underdeveloped countries have at joined (and sometimes quit) OPEC. OPEC acts as an oil cartel, trying to fix prices by controlling output, primarily through production quotas. OPEC members control about two-thirds of the world's estimated reserves of oil. OPEC members produce perhaps 40% of global output and, more importantly, around 50% of exports. OPEC rose to prominence in 1973 because of its embargo against exports to nations that supported Israel in its war with Egypt and Syria. Saudi Arabia is recognized as the linchpin of the enduring success of OPEC. In many cases Saudi Arabia has tolerated quota cheating by other OPEC members and lowered its own production to raise prices. Thus when Saudi Arabia wants to lower prices it tends to be able since it is likely to be the only OPEC member with spare capacity.