Sept. 14, 2026, marks 66 years since the Organization of the Petroleum Exporting Countries was founded. The anniversary provides an opportunity to examine the path OPEC has traveled and consider the challenges ahead. Four issues deserve particular attention: why OPEC was established; the major developments that have shaped the organization since its creation; reforms needed to strengthen its structure and performance; and recommendations that could help OPEC address future challenges.

OPEC was established in Baghdad on Sept. 14, 1960, following extensive negotiations among several oil-producing countries, with Venezuela and, in particular, its then-oil minister Juan Pablo Pérez Alfonzo playing a prominent role. Venezuela, Iran, Iraq, Kuwait and Saudi Arabia agreed to establish the organization.

The roots of OPEC's creation can be traced to the conduct of major oil companies toward producing countries in the decades before its establishment. In many cases, their practices were detrimental to resource-owning nations and continued even after World War II.

At a time when countries devastated by the war needed increasing amounts of energy to rebuild their economies and infrastructure and pursue industrial development, oil prices continued to decline. Under such circumstances, establishing a common organization among oil producers was a response to the power and conduct of the major oil companies and an effort to give resource-owning countries a greater say in determining the future of their oil resources.

The major oil companies operating at the time, many of which had roots stretching back decades before OPEC's creation, later merged, changed names or were replaced by other major corporations. They became known in the oil industry as the "Seven Sisters."

The term "sisters" traditionally evokes ideas of affection, solidarity and a close relationship with their host countries. In practice, however, the conduct of these companies toward oil-producing nations was often the opposite of what the term implied.

At the time, oil-producing countries were few in number and, without exception, were affected by the colonial and economic and political influence of the countries where the major oil companies were based. Despite these circumstances, OPEC was labeled a "cartel" by groups promoting the interests of countries that hosted the major oil companies.

The issue was not simply declining oil prices. In that period, efforts by producing countries to establish greater security and sovereignty over their oil resources could also trigger strong reactions. The nationalization of Iran's oil industry is a clear example.

The United States, which after World War II had positioned itself as a supporter of other countries and their economic reconstruction, was at the same time pursuing extensive efforts to rebuild war-damaged European infrastructure through the Marshall Plan. Yet after Iran nationalized its oil industry and the Anglo-Iranian Oil Co. — later known as BP — the United States became involved at Britain's request.

About 18 months after the nationalization of Iran's oil industry, a coup was carried out on Aug. 19, 1953, against Iran's legally elected prime minister, Mohammad Mosaddegh. Following his removal from office, a new structure involving the British oil company and a consortium of major international oil companies entered Iran's oil industry.

The issue was not confined to Iran. Similar examples existed elsewhere. The problem, therefore, was not merely keeping oil prices low; resistance by producing countries to the major oil companies could be met with the strongest reactions from the governments of those companies' home countries.

It should be noted that the five founding members of OPEC did not share identical political views or identical approaches to colonialism, particularly the influence of the oil powers. Nevertheless, the creation of OPEC brought together a group of less-developed or developing countries and gave them a collective presence that carried considerable weight in the international arena at the time.

This contradiction — between claims of supporting development and reconstruction on one hand and intervention in a producing country's efforts to exercise sovereignty over its oil resources on the other — was part of the historical context that encouraged OPEC's founding members to recognize the need for cooperation and for an organization independent of the major oil companies.

What Happened to OPEC After Its Creation

Among the developments following OPEC's establishment was the creation of the Organization for Economic Cooperation and Development, or OECD, one year later. The OECD was essentially a continuation and expansion of the Organization for European Economic Cooperation, or OEEC, with a broader mandate.

The United States and Canada initially joined the organization, followed by other countries that had not previously belonged to the OEEC. Today, the OECD has 38 members, including countries such as Australia.

OPEC was registered with the United Nations in 1961 as an intergovernmental organization. However, it is notable that the OECD characterized OPEC as an "international cartel," a position that clearly reflected the hostile attitude of some of its members at the time and, in some respects, continued thereafter.

This was despite the fact that major oil companies were extracting substantial wealth from successive generations in OPEC member states and, indeed, from oil-producing countries outside OPEC. Those companies were referred to as the "Seven Sisters," while OPEC, which at the time had limited power, was accused of acting as an "international cartel" against consumers.

One of the developments that later strengthened OPEC's position was the Arab-Israeli conflict involving countries including Egypt and Syria and Israel.

The conflict continued amid counterattacks by Israel and support, particularly from the United States and several European countries. Ultimately, the Arab and Palestinian independence movements suffered defeat.

In response to that support, Arab OPEC members, whose number had increased since the organization's early years, imposed an oil embargo on countries that supported Israel and its attacks against Arab countries. One of their most important measures was suspending oil sales to those countries, contributing to a rise in global oil prices.

It is regrettable that the government of Iran under Mohammad Reza Shah Pahlavi did not participate in the oil embargo. Some historical documents also indicate that Iran's government at the time sold oil and fuel to Israel.

The challenges did not end there. During this period, OPEC members faced not only direct and indirect measures taken against them, openly or covertly, but also the creation of new institutions.

One of the most important was the International Energy Agency, or IEA, established in 1974 by the OECD.

The creation of the IEA was largely aimed at countering the effects of OPEC decisions and enabling its members to respond to OPEC's short-, medium- and long-term measures. One of the agency's early policies was the establishment of strategic oil reserves.

As the IEA expanded its membership, this policy also grew. The underlying rationale was that if another disruption in oil supplies occurred, member countries would have sufficient reserves to meet their needs for a period of time. From this perspective, strategic reserves can be regarded as one of the measures developed in response to OPEC's influence and as part of the energy-security framework of IEA members.

The IEA's activities, however, were not limited to strategic reserves. A review of the institution's policies over the years suggests that some of its measures were designed to reduce the international impact of OPEC decisions.

One such development was the emergence of parallel oil-trading markets, often referred to as paper oil markets, alongside physical oil markets. The scale of these markets can be understood by comparing their trading volumes with the volume of physical oil actually traded and consumed worldwide.

Under normal conditions, roughly 100 million to 105 million barrels of oil are traded and consumed globally each day, although recent developments in the Persian Gulf have adversely affected oil trading volumes.

By comparison, reported trading volumes in paper oil markets are far larger. On Europe's ICE, the Intercontinental Exchange, contracts equivalent to about 1.3 billion barrels of oil are reportedly traded per day. On the New York Mercantile Exchange, or NYMEX, the figure is about 1.62 billion barrels per day.

The important point is that the price of oil sold from one country to another is generally linked to benchmark prices established in these markets. Both ICE and NYMEX are U.S.-based exchanges.

The history of these markets also deserves attention. At a time when oil-consuming countries, including the United States, were seeking to develop new oil resources such as shale oil trapped in tight rock formations, production required more technology and higher costs. At low oil prices, shale production was not economically viable.

Under such circumstances, paper markets helped push oil prices above $140 a barrel. At those prices, shale production became economically viable. As production expanded and extraction costs declined, conditions emerged for oil prices to fall again.

Thus, the same financial-market mechanisms that had contributed to higher oil prices could also operate in the opposite direction.

Recent developments in the oil market provide another example. Despite concerns over insufficient physical oil supplies because of developments in the Persian Gulf and U.S. and Israeli interventions in some countries, the two major oil exchanges have helped keep current price trends relatively subdued. Even the price increases seen over one or two days have been nowhere near the magnitude of the surge above $140 a barrel that helped make shale production economically viable.

From this perspective, paper oil markets cannot necessarily be viewed simply as mechanisms designed to moderate prices in favor of consumers. In practice, they have provided a platform for major oil companies, investors and large trading firms to profit from price fluctuations and oil-related financial transactions. A significant portion of these profits ultimately goes to major corporations and extremely wealthy investors, including billionaires participating in these markets.

Reforms OPEC Needs

The reforms that OPEC should consider are closely linked to the organization's history and to relations among its members.

Over its 66-year history, OPEC members have at times had serious disagreements, and some members have even fought wars against one another, including Iraq's war against Iran and Iraq's invasion of Kuwait.

Yet from an external perspective, one particularly unconvincing aspect has been the organization's difficulty in reaching agreement even on the appointment of its secretary-general, OPEC's highest executive position, which requires the approval of all member states' oil ministers.

OPEC ministers normally hold two formal meetings each year, mainly at the organization's headquarters in Vienna. Additional meetings can be held when necessary, including at other locations or virtually.

The secretary-general is elected for a three-year term, which can be extended for another three years with the approval of all ministers. Yet OPEC has at times gone through periods without an elected secretary-general. Under the organization's rules, in such circumstances the minister chairing the annual ministerial meeting assumes the secretary-general's responsibilities.

Unfortunately, the external perception of such situations has been one of OPEC's weakening rather than the strengthening of its members.

Continued difficulties of this kind are seen less as evidence of member states' power than as a sign that the organization cannot reach consensus — particularly when its members cannot agree on a secretary-general acceptable to all.

There have even been efforts to reach an understanding on rotating the secretary-generalship equally among members, but these have not produced lasting results. In some cases, terms have been extended beyond the agreed six-year period, including extensions of more than two years, in order to avoid selecting another individual.

This can be regarded as a weakness in decision-making at the highest level of the organization.

Naturally, each OPEC member must pursue its national and political interests. But when countries join an organization they jointly created, the purpose should be to strengthen areas of cooperation and common capacity, not deepen existing differences.

Unfortunately, this problem persists. OPEC should not be weakened further, and member countries should begin negotiations well in advance of the end of the current secretary-general's term to ensure agreement on a successor.

Another issue requiring attention in OPEC reform is membership.

The departure or absence of certain members is not a new phenomenon. Throughout the organization's history, countries have joined OPEC, subsequently left for various reasons, including national considerations, and in some cases returned.

Several African countries and at least one South American country have experienced departures and returns. Indonesia also rejoined OPEC after leaving but ultimately did not maintain its membership because of declining oil production and its status as a net oil importer rather than a net exporter. Qatar and Ecuador are other examples of countries that have left the organization.

Although the departure of any member can affect OPEC's overall supply to the global oil market, the more important issue is maintaining coordination among members.

OPEC's importance is not determined solely by the number of barrels produced by its members. Their conduct in the international arena and the image they project of cooperation and cohesion are even more important. Member states should be seen internationally as a coordinated and cooperative group rather than as a collection of fragmented countries.

To better understand this point, it is important to consider OPEC's current share of global oil demand.

At one point, OPEC supplied about 40% of global oil demand. According to the latest figures available in August, however, the organization's members now account for about 19.4% of global demand.

Some members have extremely low production levels, including around 47,000 barrels per day. Others produce four to five times that amount. Two African members, for example, produce about 217,000 and 275,000 barrels per day. Such volumes are not individually decisive for the global oil economy.

The same consideration applies to OPEC+. Following the 2016 agreement, 10 non-OPEC countries joined OPEC members in the broader cooperation framework.

Even when these countries are considered, a distinction must be made between the number of countries involved and their actual weight in the oil market. Among them are producers with daily output of roughly 65,000 barrels, 21,000 barrels, 90,000 barrels, 101,000 barrels, 315,000 barrels and 450,000 barrels.

None of these figures alone is decisive in the global oil market, although their combined output can be significant. But if the decisions of these countries are not coordinated, the significance of their individual participation is diminished.

The key point is that each production figure is backed by the producing country's national policies, while countries do not have equal political and economic weight.

A country producing 450,000 barrels per day does not necessarily have the same influence as a much larger producer. Similarly, a country producing 21,000 barrels per day cannot exert the same influence over other producers or over the direction of OPEC or OPEC+ as a major producer.

Therefore, when assessing the structure of OPEC and OPEC+, the number of members alone is insufficient. The actual production and share of global oil supply represented by each country must also be taken into account.

From this perspective, OPEC reforms should strengthen the organization's position as a major source of global oil supply and as an institution for cooperation among producers.

OPEC should also be capable of cooperating with other organizations active in the energy sector, including institutions that have at times adopted different or even opposing approaches. The IEA is one of the most important examples.

OPEC was established in response to the damage and pressure that major oil companies had imposed on producing countries, with members uniting to defend their common interests. That unity should not lead to confrontation with final consumers.

Ultimately, oil consumers are people — whether they live in the East or West, North or South, and whether they live in wealthy or poor countries. Their interests must therefore also be considered in OPEC policymaking.

Achieving this objective requires meaningful changes in how members interact with one another and, particularly, in how their cooperation is presented externally. OPEC should project greater cohesion and a unified voice.

The Future of Oil and Energy

The final issue OPEC must consider concerns the future of energy and the position of oil in the global energy mix.

OPEC is one of the world's major international organizations, bringing together a significant number of oil-producing countries within a common framework and seeking to coordinate their policies. The organization's future is therefore closely linked to changes taking place in the global energy system.

Looking back at energy history, coal played a major role in the development and industrialization of many countries after centuries of use. Oil subsequently became the world's most important energy carrier and continues to play a significant role in economic development, industrialization and global growth.

However, the global energy structure is changing. The development of new energy sources, generally described as clean or renewable energy, could affect oil's position in the future.

Wind, solar, geothermal, wave and tidal energy, as well as other emerging technologies, have expanded rapidly in recent years.

Oil will therefore likely remain one of the world's important energy sources, but it will increasingly coexist with a more diverse range of energy sources. It cannot preserve its former position solely through traditional uses.

The oil industry must adapt to new scientific and technological developments and compete fairly with emerging energy sources while reducing its environmental impact and developing new applications for oil.

Oil should not be viewed solely as a fuel for traditional uses. Through technological development, downstream industries and petrochemicals, it can find more diverse applications and generate greater value for the global economy.

Naturally, OPEC alone cannot accomplish this objective. But the organization can play a pioneering role.

As an institution representing oil-producing countries, OPEC can facilitate cooperation among its members and with other countries and scientific and technical organizations to understand future energy trends and invest in new technologies.

OPEC can also play a more active role in addressing questionable practices in financial and nonphysical oil markets, commonly known as paper oil markets.

The issue has become more important because paper trading is no longer limited to crude oil. It has expanded to petroleum products and even natural gas. Similar signs of extensive financial and trading mechanisms are also emerging in clean-energy markets.

OPEC must therefore pursue two tracks simultaneously if it wants to preserve its position in the future energy market.

On one hand, it must adapt to scientific, technological and structural changes in the energy sector. On the other, it must play a more effective role in addressing mechanisms that allow financial and nonphysical markets to influence the real energy market.

Over its 66 years, OPEC has made significant contributions and efforts toward the global oil market, while also facing accusations that have, in some cases, been unfair.

The reality, however, is that if OPEC is to preserve and strengthen its position and power, it must first become more cohesive from within.

Temporary political and bilateral differences among member states should not become international disputes within OPEC. Only through greater internal cohesion, cooperation and a unified voice can the organization preserve its influence and strengthen its role in the global energy system.

By Hojatollah Ghanimi-Fard

Senior Energy Analyst and Former Head of OPEC's Petroleum Studies Department