“Five brothers” versus “seven sisters”

More than half a century ago, five major oil producing countries – Iran, Iraq, Venezuela, Kuwait and Saudi Arabia – agreed to work together to deprive seven transnational companies – Exxon, RD / Shell, Texaco, Chevron, Mobil, Gulf Oil and BP – of unlimited influence on the oil market.

Later, the number of “brothers” reached 13 and they organized OPEC, while the “sisters” started to work independently from each other. OPEC had a great influence on the oil market for tens of years.

When there was a need to reduce or increase the oil prices, all hopes were pinned on the cartel.

The cartel’s decisions were clear, its management was accurate and effective, the violation of oil production quotas was not critical for the market and everyone turned a blind eye to this.

This situation continued until the 2000s, when OPEC’s innovative price mechanism began to shake the market, intensified the speculations, began to sow discord among the participants and led to significant violations of quotas.

The oil prices were dropping to $16 per barrel\and increasing to $143 per barrel throughout 2000s.

The artificial overstatement in oil prices came to an end in the autumn of 2014, when the prices began to fall. The fall would have continued, if sometimes the rumors about saving the market are not pushed the prices up slightly. The negotiations in Doha were one of these popular rumors.

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Source: By Vagif Sharifov www.en.trend.az