OPEC was formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. For a brief period, the petroleum cartel became the dominant force behind world oil prices and a key geopolitical power broker, with its members controlling nearly half of world oil production and more than three-quarters of global oil reserves. As U.S. oil production entered a period of apparently inexorable decline after its 1970 peak, Washington’s desire to shore-up energy security and create a bulwark against communist expansion into the Middle East saw Saudi Arabia become a key U.S. ally. OPEC at the height of its power, in the 1970s, flexed its muscles by cutting oil output causing prices to spiral upward triggering two oil price shocks that sparked global recessions. Since then, OPEC’s power has steadily deteriorated, with that decline accelerating over the last two decades because of rapidly growing non-OPEC oil production, notably in the U.S and Brazil.

The U.S. shale oil boom caused onshore production to swiftly soar after nearly three decades of decline. U.S. crude oil imports from the Middle East plummeted and Congress lifted a four-decade restriction on U.S. oil exports. Even Riyadh’s 2014 plan to regain market share and obliterate the U.S. shale oil industry by opening the spigots and significantly boosting production, causing crude oil prices to enter a sustained decline, failed.

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Source: Oil Price