OPEC's Reshaped Global Energy Landscape

The birth of OPEC in 1960 marked a turning point in global energy markets. The Organization of the Petroleum Exporting Countries was formed by five oil-producing countries - Iraq, Iran, Saudi Arabia, Kuwait, and Venezuela - to counterbalance the influence of major oil companies known as 'The Seven Sisters.'

The power dynamics between producing countries and foreign oil companies had been shifting since World War II. After colonies gained independence, resentment grew among oil-producing states over being controlled by foreign powers.

OPEC's formation was a response to the joint price cuts announced by major oil companies in 1959. The confrontation over pricing became part of a struggle for economic sovereignty and national development. However, OPEC's influence remained limited until the 1970s.

The 1970s saw a significant shift in global energy markets as OPEC controlled about 80% of known oil reserves and 40% of crude production at the time. The organization announced production cuts, leading to market anxiety, hoarding, and a surge in prices. This led to 'stagflation,' a period of inflation and stagnant growth.

Today, OPEC's influence has waned due to the US shale revolution and ongoing tensions in the Middle East. In 2023, the United Arab Emirates announced its withdrawal from OPEC, effective May 1. Korea must closely monitor developments in the Middle East and protect its national interests amidst shifting global energy markets.