1. Sample Essay on The Role of OPEC in the Middle
East
OPEC, the Organization of the Petroleum Exporting Countries, was
established in September 14, 1960 by five countries including
Venezuela, Saudi Arabia, Iran, Kuwait and Iraq. Other countries
including the United Arab Emirates, Libya, Algeria and Nigeria, Qatar
and Indonesia later joined the organization bringing the total number of
Organization of the Petroleum Exporting Countries member countries
to eleven.
The headquarters of the organization was located in Geneva,
Switzerland before it was relocated to its present location in Vienna,
Austria. Organization of the Petroleum Exporting Countries permits oil
producing societies to join the organization. The estimated population
of the nation’s comprising Organization of the Petroleum Exporting
Countries is half a billion (Wirl and Kujundzic 50). People from different
cultural backgrounds, religions and languages also characterize
different countries.
Members of Organization of the Petroleum Exporting Countries
according to Wirl and Kujundzic (56) have a common feature; they
depend on revenue generated from sale of oil to develop. The goal of
the organization is to make ideal adjustments in oil production and to
create a balance between its demand and supply in the market, to
promote harmony as well as stability because oil forms income create
the backbone of a country’s economy.
Member countries utilize revenue to start development projects.
Delegates from Organization of the Petroleum Exporting Countries
member countries organize annual meetings at least twice to discuss if
there is need for adjustments in oil production as way of ensuring there
is balance between supply and demand. They also hold talks on

2. developments that should be generated in oil market to ensure smooth
business operations.
Together, Organization of the Petroleum Exporting Countries member
states own three quarters of crude oil reserves across the globe and 40
percent of oil production across the globe and this is generated by
member states (Wirl and Kujundzic 57). The organization was created
as a reaction against the seven sister’s oil producing companies, a
western governments association that has been dominating the global
oil market.
The main reason for the creation of the organization was also based on
the fact that developing countries were not happy of exploitation by
western governments. Petroleum pricing was also very low. What’s
more, the main objective of the organization was to ensure there is an
oil reserve in every country. This could enhance development in the
countries based on the fact that Organization of the Petroleum
Exporting Countries was not just a union of oil producing nations. There
are other benefits that member states obtained directly from it to
initiate a wide range of development projects (Barsky and Kilian 120).
Role of the Organization of the Petroleum Exporting Countries
The main role of the organization was to unite and coordinate rules
governing oil production as well as petroleum sell in member countries
and to defend the people as well as their collective needs to the latter.
The organization additionally ensured that there is flow of income to
member states continuously and that clients enjoy normal and
resourceful supply of petroleum. The organization also guarantees
investors of profit in the petroleum industry (Dixit and Pindyck 100).
Organization of the Petroleum Exporting Countries’ responsibility is to
ensure stability of petroleum global market. It is also the organization’s
commitment to ensure that client needs are fully met via consistent oil
supply. To achieve the objective, Organization of the Petroleum
Exporting Countries works with other nonmember states producing oil

3. when it comes to making vital decisions on oil supply across global
markets.
The purpose of reaching a decisive decision is to ensure that both
consumers and petroleum producers are satisfied with oil prices. For
producers and other stakeholders in the industry to achieve a fair oil
return, the price should be increased. Additionally, increase in prices
leads to more investment and in return, enhances production capacity
in the future.
Even so, if petroleum prices are set to increase, clients are more likely
to shun from purchasing it. The result is creation of a small market and
a reduction of Organization of the Petroleum Exporting Countries share.
Naturally, oil prices are unstable. To ensure stability in supply and of
global oil market, Organization of the Petroleum Exporting Countries
should ensure that oil producers gain more profits and that at the same
time; clients get oil at a price that is reasonable (Tang and Hammoudeh
578).
Organization of the Petroleum Exporting Countries organization sets
petroleum prices. Its decision is quite influential in determining oil
prices based on the fact that it is a major producer. For example, some
oil producing member states declined to export its products to western
countries in the event of energy crisis in 1973. This was as a result of
the fact that Israel received a lot of support from western countries in
Yom Kippur War, as they fought against Egypt and Syria.
This led to a fourfold increase in petroleum prices between October 17,
1973 and March 18th
1974. Organization of the Petroleum Exporting
Countries member states decided to settle for a 13 percent increase in
crude oil price in January 7th
1975. All Organization of the Petroleum
Exporting Countries member states gave in to the global policy aimed at
enhancing economic growth. A meeting on the same was held in Algiers
where member countries agreed to stabilize the prices of its
commodities.

4. To ensure oil prices are maintained, Organization of the Petroleum
Exporting Countries had to ration oil production. The purpose of
stabilizing the prices was to eliminate the instability of prices which
affects the economy of member countries. It is therefore very clear that
Organization of the Petroleum Exporting Countries plays a very crucial
role in determining petroleum prices because it is a major producer
(Tang and Hammoudeh 580).
The organization also aims at promoting member states development
by ensuring oil reserves benefits trickle back to respective nation’s
development purposes. The Declaratory Statement of Petroleum Policy
initiated in 1968 enacts this kind of provision. The policy called for
domination of natural resources by every state so that they can be
utilized in developing nations.
Organization of the Petroleum Exporting Countries s activities also
aimed at maintaining peace in global petroleum markets, setting good
prices and enabling member states to choose the destinations of their
products (Mead 356). The revolutionary movements in Arab countries
called the Arab Spring have also been a major threat to the growth of
the organization. Arab Spring refers to a period from December 2010 to
date during which Arab countries witnessed riots, civil wars violent and
peaceful protests and demonstrations.
The revolution’s wave saw the removal of rules from Egypt, Tunisia,
Yemen and Libya from power by the end of 2013. Bahrain and Syria
have also witnessed a wave of civil wars and countries such as Kuwait,
Morocco, Jordan and Saudi Arabia among others in Arab world have
witnessed major and minor protests (Chapman and Khanna 375).
Oil producing countries are negatively affected by recent uprisings in
the Middle East as well as North African regions bearing in mind that
revenue is essential for states to meet their social policy expenses and
to get rid of conflicts effectively. To overcome other challenges,
member countries are also forced to increase petroleum prices.

5. The demand for oil is also more likely to generate consequences. This is
based on the fact that subsidized oil prices leading to increase demand
of the products. If price changes are effected in the mentioned
countries, members will also directly account for extra pay needed by
the organization.
By doing so, this will lead to reduced demand. Increased in price as
required by organize will also led to increase in demand and reduced
supply. The Arab Spring led to reduced oil production in Organization of
the Petroleum Exporting Countries member countries. The monthly
cartel report in 2013 revealed that social conflicts have led to reduction
in oil production. Production of Oil in Iraq for example has reduced
significantly and Libya hasn’t regained its position as a result of civil
wars.
Additionally, following attacks by Al Qaeda in January 2013, oil
production in Algeria has deteriorated a great deal (Horn 279).
Conclusion
Organization of the Petroleum Exporting Countries since its inception to
date plays a wide range of roles. Its roles and objectives are clearly
outlined in the Organization of the Petroleum Exporting Countries
statute that was created upon the institutions development. These
roles are still relevant and applicable in today’s age and era and
seemingly, they will continue to be used to run the organization in the
coming years.
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6. Works Cited
Barsky, Robert, and Lutz Kilian. “Oil and the Macroeconomy since the
1970s.” Journal of Economic Perspectives, 2004, 18, 115–134. Print.
Chapman, Duane, and Neha Khanna. “An Economic Analysis of Aspects
of Petroleum and Military Security in the Persian Gulf.” Contemporary
Economic Policy, 2001, 19, 371–381. Print.
Dixit, Avinash, and Robert Pindyck. Investment under
Uncertainty, Princeton: Princeton University Press, 1994. Print.
Horn, Manfred. “Organization Of The Petroleum Exporting Countries ’s
Optimal Crude Oil Price.” Energy Policy, 2004, 32, 269–280. Print.
Mead, Walter. “The Performance of Government Energy
Regulation”. American Economic Review, 1979, 69, 352–356. Print.
Tang, Linghui, and Shawkat Hammoudeh. An empirical exploration of
the world oil price under the target zone model. Energy Economics,
2002, 24, 577–596. Print.
Wirl, Franz, and Azra Kujundzic. “The Impact of Organization Of The
Petroleum Exporting Countries Conference Outcomes on World Oil
Prices 1984–2001.” The Energy Journal, 2004, 25, 45–62. Print.
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