OPEC Chronology

1960 September Five major oil exporters - Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela - form the Organization of Petroleum Exporting Countries (OPEC). The OPEC nations' export taxes are based on 50 percent of the profits of the major international oil companies.
1965 Annual growth rates for each OPEC member's oil exports are set. This unsuccessful program ends in 1967.
1967 June Third Arab-Israeli war closes Suez Canal.
1968 OPEC issues a declaration of goals including the maximization of oil revenues and the ultimate achievement of effective control of oil company operations.
1971 February OPEC's Teheran Agreement signals that OPEC will take an active role in setting oil prices. OPEC raises its excise tax (which replaced the profits tax) rate from 50 to 55 percent and bases it on a tax reference price that exceeds the market price and does not decline with oil prices.
1973 The world price of oil rises after the Teheran Agreement so that by early 1973 it surpasses the posted tax reference price.
1973 September Libya nationalizes 51 percent of all oil properties.
1973 October The representatives of the six Persian Gulf states of OPEC meet and raise the reference price. The fourth Arab-Israeli war leads Arab governments to order oil production cutbacks and to place an embargo on oil shipments to the United States and the Netherlands. Panic buying of oil sends prices in special auctions over $15 per barrel.
1974 January OPEC raises prices from $2 per barrel ($2/b) to over $7/b (both spot and contract prices are increased) and restricts output.
1974 March-June Kuwait Oil Company is nationalized. Several governments acquire 60 percent interest in oil production.
1974 July Saudi Arabia's Oil Minister, Yamani, announces a 1.5 MMB/D (million barrels per day) auction on the open market. This announcement is strongly criticized by the rest of OPEC and creates dissension within the Saudi royal family.
1974 August Saudi Arabia cancels the auction. Political tensions between the Saudis and the Shah of Iran increase. The Shah wants high prices to pay for arms.
1974 December Price of Saudi Arabian oil increases 65¢ per barrel. Other countries follow the Saudi lead. Saudi Arabia absorbs the largest share of the resulting reduction in total OPEC exports.
1975 Jan.-August World economy at the bottom of a major recession. Industrial activity is down 3 percent while inflation is up 14 percent. OPEC production is down 17 percent from 1974 levels. There is widespread price discounting by Abu Dhabi, Libya, Nigeria, Iraq, Algeria, and Ecuador. In June, the Suez Canal reopens.
1975 Sept.-Oct. Saudis push for a price reduction in real terms, but the Shah of Iran, facing a $4 billion trade deficit, pushes for a large price increase. The Saudis call for a 5 percent nominal price increase, while the Shah advocates a 15 percent increase. The Saudis threaten to freeze prices and produce at near full capacity. The price of oil rises 10 percent.
1976 Industrial activity in the world economy is up 8 percent over 1975 levels, increasing the demand for oil. Algeria and Libya undersell Nigerian high-grade oil.
1976 December Saudis propose a price freeze. Iraq calls for a 25 percent increase and Iran for a 15 percent increase in price. Saudi Arabia lifts its 8.5 MMB/D production ceiling.
1977 February Iranian production rises from 5.1 to 6.2 MMB/D. Saudi production rises from 8.5 to 8.9 MMB/D.
1977 July OPEC nations agree to set price at $12.50. Saudi Arabia returns to 8.5 MMB/D ceiling.
1978 Widespread strikes in Iranian oil fields and political unrest lead to sharp reductions and then suspension of Iranian exports. Saudi Arabia's production increases from 8.4 to 10.4 MMB/D. OPEC's excess capacity is three times greater than Iran's reduction in oil exports.
1979 January Shah of Iran is overthrown. Saudi Arabia's production falls from 10.4 to 9.5 MMB/D. The spot price rises.
1979 February Uncertainty about supply creates a "buyer panic." The price of oil rise to $32/b.
1979 March The new Iranian government resumes production at a lower (than historical) rate. All but a few OPEC countries increase production. The spot price falls from $32/b to $24/b.
1979 April Saudi officials meet with those of the new Iranian regime. Saudi Arabia cuts production to 8.5 MMB/D.
1979 Summer OPEC decides to make export determinations on a monthly rather than quarterly basis, which increases uncertainty. Western nations stockpile oil. Saudi Arabia keeps its price $2/b below the rest of OPEC and increases production back up to 9.5 MMB/D.
1979 October Oil glut forces prices lower again. OPEC countries ignore an agreement to cut production 10 percent.
1979 Nov.-Dec. The spot price reaches $35/b. Arab Light rises to $24/b after disruption of OPEC price unity and a series of individual member price increases.
1980 September Start of the Iran-Iraq war. Arab Light oil price is set at $34/b.
1981 Production is 2 MMB/D above actual consumption despite low production by Iraq and Iran. OPEC members jointly agree to production cuts.
1981 Feb.-March Total OPEC production falls 15 percent from 1980. Official government selling prices fall for every OPEC nation except Saudi Arabia, which raised the price of Arab Light to $34, and Indonesia, which kept price constant.
1982 Jan.-Feb. Saudi Arabia holds prices of Arab Light at $34 and cuts price of lower grade crude. Rest of OPEC cuts or holds official price. Total OPEC production falls 17 percent and Saudi production falls 34 percent from 1981 levels. A world oil glut forces OPEC to make its first major price cut. Saudi Arabia lowers price of Arab Light from $34 to $29. OPEC official prices fall over 14 percent between January 1982 and March 1983.
1984 August Saudi Arabia boosts output by 1 MMB/D beyond its voluntary quota of 4.5 MMB/D. This increase triggers a further slide in prices. It also signals to other OPEC countries that increasing output is acceptable.
1985 March Great Britain decides to price its North Sea oil at market prices rather than following OPEC's price structure. This "free market" policy puts OPEC under further pressure to lower its posted prices.
1985 June Saudi Arabia cuts back production to 2.4 MMB/D, its lowest in nearly two decades and one-quarter of its 1981 high, in an effort to stabilize prices. Non-OPEC's production is 33 percent higher than in 1979, undercutting OPEC's prices.
1985 September Saudi oil minister Ahmed Zaki Yamani threatens a price war in an effort to pressure the rest of OPEC's 13 members into halting the now common practice of selling below official prices and exceeding their production quotas.
1985 October Saudi Arabia announces that it will sell an additional 1 MMB/D at the discount price of $3/b, which is below the official rate. King Fahd threatens that Saudi Arabia may go further and start producing its full quota of oil.

September 13, 1985.
Sheikh Ahmed Zaki Yamani, the minister of oil of Saudi Arabia, declared that the monarchy had decided to alter its oil policy radically.

Saudis stopped protecting oil prices, and Saudi Arabia quickly regained its share in the world market. During the next 6 months, oil production in Saudi Arabia increased fourfold, while oil prices collapsed by approximately the same amount in real terms.

1986 March OPEC meets in Geneva and fails to reach a new agreement on limiting quotas.
1986 April For the first time in seven years, gasoline is selling at U. S. pumps for less than $1 per gallon. Oil prices plummet to $12/b.
1986 Aug-Sept. OPEC agrees to limit output. Production falls from 20 MMB/D in August to 15 MMB/D in September. Prices rise from $10/b to nearly $17/b but then settle at $14/b. U.S. production falls due to lower prices. Saudi Arabia, Kuwait, and the United Arab Emirates demand larger national quotas after years of self-imposed restrictions designed to shore up prices.
1986 November Sheik Yamani, long time Saudi oil minister and unofficial leader of OPEC, is fired by King Fhad for allowing prices to plummet for the past several years.
1987 December OPEC oil minister debate how to arrest the price slide and their falling market share, down 11 points from 1980 through 1986. A special production committee will police members' output levels. OPEC votes to impose production quotas on all member countries, but Iraq and the UAE announce they will not comply. The UAE has a long history of noncompliance and Iraq is worried that higher prices will help Iran continue fighting. Iran is pushing hard for production cuts and higher prices so that it can increase revenues to buy arms for the war. Saudi Arabia, supporting Iraq, states it is unwilling to reduce output enough to boost prices.
1988 March Open-market oil prices fall. OPEC hopes to put pressure on nonmember producers by abandoning its official price of $18/b and sustaining its present production levels. Fadhil al Chalabi, OPEC's deputy secretary general, calls on member nations to abandon fixed prices for a more flexible market price system that would let them compete with non-OPEC producers.
1989 January Oil prices reach $15/b but then fall again. OPEC production is above quotas.
1989 March The Soviet Union announces cuts in exports to cooperate with other producers to raise prices.
1989 April Oil prices exceed $22/b due to an Alaskan oil spill, damage to the Alaskan pipe line, and an explosion on a North Sea platform.
1990 April The president of OPEC announces that it is ready to restore oil prices to $18 a barrel. Prices continue to fall and then rise to about $18.
1990 May OPEC members pledge to trim output by about 6 percent. Oil prices fall.
1990 July Kuwait's new oil minister says that his goal is to raise prices to $18 rather than press for an immediate increase in his output quota. President Saddam Hussein of Iraq openly threatens to use force against Arab oil-exporting nations if they do not curb their excess production. His warning is clearly aimed at Kuwait and the United Arab Emirates. OPEC ministers reportedly close to an agreement to raise oil prices to $21 or $22 a barrel, apparently in response to Iraq's massing of troops on the Kuwaiti border.
1990 August Iraq invades Kuwait. Industrialized nations embargo purchases of oil from Iraq and Kuwait. A militant group of oil producers led by Algeria, Libya, and Iran block an attempt by Saudi Arabia and Venezuela to call an emergency meeting of OPEC to stabilize soaring prices. Oil prices exceed $31, the highest price since 1985. Oil ministers gather for informal talks about stabilizing prices. OPEC frees its members to increase production to meet short-fall caused by the Persian Gulf crisis. Oil prices drop by $2.
1991 February OPEC leaders indicate that they would agree to a cut in production to avoid a crash in oil prices following the conclusion of the Gulf War. OPEC draws up a strategy to cut production to drive oil prices back toward $21. Price at $19.
1991 May The United States and United Kingdom say they want Iraqi President Saddam Hussein out of power before allowing the UN Security Council to lift its embargo on Iraqi oil imports. OPEC warns prices will rise if the embargo is not removed.
1991 September Saudi Arabia calls for a 10% increase in OPEC output limits for the remainder of 1991 to minimize effects of the disruptions of Soviet oil supplies. OPEC ministers generally agree with a plan to lift prices $2 a barrel while making room for Iraq and Kuwait to resume oil exports, but Saudi Arabia does not agree with new output reductions. OPEC agrees to keep output high for the rest of the year.
1992 January Some OPEC countries cut production due to falling prices. Saudi Arabia does not join them at first, but then agrees to a modest cut.
1992 May Kuwait raises production as its war-damaged oil fields come back on line. Oil prices rise although Saudi Arabia pushes OPEC for higher output agreements.
1992 September Ecuador quits OPEC, citing cost of membership ($2 million) and OPEC's refusal to raise Ecuador's production quota of 320,000 barrels per day (second smallest of all member nations).

Griffin and Teece (1982); American Petroleum Institute, Basic Petroleum Data Book (1983); Crémer and Salehi-Isfahani (1989); various newspapers and business journals.