OPEC founded in Baghdad
The Organization of Petroleum Exporting Countries was formed in Baghdad on September 14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela — five governments tired of having unilateral price cuts imposed on them by the Seven Sisters Western oil majors. For the next twelve years OPEC had little practical leverage. But the structural fact had changed: the producing states now had a forum to coordinate. By 1973 they would use it to administer the largest peacetime price shock in modern economic history.
Venezuela's Juan Pablo Pérez Alfonzo and Saudi Arabia's Abdullah Tariki are usually credited as the chief architects of OPEC. Their model was the Texas Railroad Commission, which had successfully managed Texas oil output (and prices) since the 1930s by setting state-level production quotas. OPEC was, conceptually, the Texas Railroad Commission scaled to the global level.
03 · Black Gold
Oil arrived as a curiosity — a medicine, a lamp fuel, a substitute for whale oil — and within fifty years had become the most strategic commodity on Earth. The first commercial well was drilled in Pennsylvania in 1859. By 1911 a single American family controlled most of the world's refined oil. By 1914 the British Royal Navy had switched from coal to oil at Churchill's insistence, and the country with the best oil reserves was no longer Britain. The 20th century is, in plain economic terms, the century the energy capital moved from Tyneside to Texas — and from Texas, eventually, to Riyadh.
Read the full era →