TOKYO - The collapse of crude oil prices raises serious questions about the future of OPEC. Yet it may be premature to pen an obituary for the once-powerful cartel.
OPEC's troubles can be traced back to its general meeting in London in March 1983, according to Shigeru Sudo, a professor at Japan's Teikyo Heisei University who keeps a close eye on the organisation. After 12 days of debate at a hotel overlooking Hyde Park, the group decided to lower the price of oil by $5 a barrel. It was the first cut since the organisation's establishment in the 1960s.
In the 1970s, OPEC wrested pricing power away from big American and European oil companies. During the Yom Kippur War in October 1973, the organisation hiked its official crude price without any external consultation, taking advantage of its members' status as the world's key oil suppliers. The value of crude quadrupled, triggering chaos in Japan and other oil-importing countries. In five years, OPEC economies' oil export revenues jumped sixfold.
The organisation was still immensely powerful in 1983, but there had been a structural shift in the global market. Output from non-OPEC members had surged as production picked up in the North Sea, Russia and elsewhere. That year, the combined output from nonmembers surpassed that of members. This made it harder to control prices.