OPEC: Calming a nervous world oil market

Abstract

In October 1973, the oil-exporting countries announced an increase in oil prices from $3.11 to 5.12 per barrel. The consuming nations regarded the price increases with horror—as an audacious and unwarranted economic humiliation. Since then, the oil-exporting countries have increased the market price of crude ten times, reaching $28 per barrel, and almost everyone agrees that there remains a wide margin for further price increases to producers, consumers, and international oil companies. In retrospect, the 1973 price increases seem moderate, but they were the first obvious manifestation of irrevocable changes in the oil market and, most important, in the world's international power structure.