Issues Motivated for Choosing the StudyThe main factor that

Issues Motivated for Choosing the StudyThe main factor that motivated this study was the worlds dependency on oil even today. The scenario of how oil is produced and distributed has undergone a major change. Oil is a highly political commodity and has more than once taken the centre of the stage in international affairs. To be able to delve into how OPEC lost its iron grip on oil prices but still remains one of the most powerful and important cartels in the world was extremely interesting. Not only the prospect to study the transition of the oil cartels from early on right unto now but also to learn how these major changes the industry has gone through impacts the future of the oil market as well as oil cartels. Origin and NatureThe term cartel, can be defined as “a group of parties, factions, or nations united in a common cause; a bloc”. Before the rise of OPEC, the oil industry was dominated by the large oil companies often known as the Seven Sisters that possessed the technology and skills for exploration and production that the countries lacked. OPEC was born to reduce the influence the oil multinationals. The Seven Sisters was a group was made up of seven American and British firms Anglo Persian Oil Company (today’s British Petroleum), Gulf Oil, Standard Oil of California, Texaco, Royal Dutch Shell, Standard Oil Company of New Jersey and Standard Oil Company of New York. OPEC is the Organization of Petroleum Exporting Countries, founded in Bagdad in 1960 and currently has 11 members. Its aim is to regulate the amount of oil that member nations produce and to keep prices at a steady rate. The countries get together twice a year and agree on how much oil each country is allowed to produce. OPEC’s headquarters are in Vienna.Before OPEC was created, there were large oil companies that controlled the world’s oil production. They wanted to sell as much oil as possible and did not let governments influence their decisions. Oil-rich countries, especially in the Middle East, wanted more control over the oil that they produce. As a result, Iran, Iraq, Saudi Arabia, Kuwait and Venezuela founded OPEC. In the following years Qatar, Indonesia, Libya, Algeria, Nigeria, Ecuador, Angola and the United Arab Emirates also become members. In the 1960s, OPEC did not have much power. This changed in 1973 when the third Arab-Israeli war started. The United States and a few European countries supported Israel.  As a form of punishment, OPEC nations, influenced by the Arab countries, stopped selling oil to the West. Within the next six years oil prices rose to ten times the price of the early 1970s. OPEC countries became rich with so-called petrodollars; the West sank into deep recession because they needed OPEC’s oil.Before the 1973 oil crisis, the different companies from the Seven Sisters controlled approximately 85 percent of the global oil reserves. Since then, this has shifted dramatically away from the Seven Sisters Oil Companies over to a combination of the OPEC oil cartel nations as well as several state controlled gas and oil companies in the emerging world economies.