OPEC's Birth in Baghdad: Resource Sovereignty Asserted

The Organisation of Petroleum Exporting Countries (OPEC) was born on September 14, 1960, in Baghdad. Five oil-producing nations, Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, met to challenge Western oil companies' pricing power.

Before OPEC's formation, the 'Seven Sisters' controlled oil production, pricing, and profits. Oil-producing countries received royalties but had little say over production levels or prices. In February 1959, Western companies unilaterally cut oil prices, reducing producer revenues. A second cut followed in August 1960.

The frustration led to coordinated action, with Venezuela's Juan Pablo Pérez Alfonzo and Saudi Arabia's Abdullah al-Tariki advocating for producer cooperation since the late 1940s. OPEC's objective was to coordinate petroleum policies to secure fair and stable prices for producers, efficient supply to consumers, and a fair return on capital for investors.

OPEC introduced the concept of resource sovereignty, oil-producing states should control their own resources. This challenged the colonial-era structure where Western companies owned concessions and set terms. OPEC's real impact came in the 1970s, after the 1973 Yom Kippur War, when Arab members imposed an oil embargo on Western supporters of Israel.