Saudi Arabia and Iran in the OPEC

The New Deal

Abstract

The Organization of the Petroleum Exporting Countries (OPEC) accounts for more than 40 percent of global oil production and four-fifths of the world’s proven oil reserves. Among the member states, six Middle Eastern countries control two-thirds of OPEC’s oil production and reserves, and due to their low costs they can exercise significant influence in the Organization. The international oil cartel tries to manipulate oil prices through controlling supply, and its decisions have come to play a prominent role in international relations, particularly when conflicts lead to extended interruptions in oil supply. In this paper, after covering the basics on OPEC, the process of oil price development is discussed, followed by an evaluation of the current stance of Saudi Arabia and Iran in the Organization regarding the new OPEC deal of November 30, 2016.