September 10, 2010 / 9:41 AM / 9 years ago

TIMELINE: 50 years of OPEC

(Reuters) - OPEC on September 14 marks 50 years of existence.

The following is a timeline showing landmarks in its history.

September 10-14, 1960 - Baghdad conference creates the Organization of the Petroleum Exporting Countries. Five founding members are Iran, Iraq, Kuwait, Saudi Arabia, Venezuela.

The producer countries are spurred into action by a decision by the so-called “Seven Sisters” — a group of multinational oil companies — to reduce the prices of crude they supplied.

The five founders are later joined by Qatar (1961), Indonesia (1962-suspended membership from January 2009), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973 — suspended membership in December 1992 until resuming membership in October 2007), Angola (2007) and Gabon

(1975-1994)

September 1, 1965 - OPEC moves headquarters to Vienna from Geneva.

1973 - Arab-Israeli war. An Arab oil embargo causes panic-buying, resulting in the first oil shock. Prices for Arabian Light crude leap to $10.41 in 1974 from $2.83 in 1973, according to the BP Statistical Review.

1975 - Carlos the Jackal leads a team that storms into a meeting of OPEC in Vienna and takes OPEC ministers, including then Saudi Oil Minister Sheikh Ahmed Zaki Yamani, hostage.

1979 — Revolution in Iran, then the second biggest oil seller after Saudi Arabia, produces a second oil shock. Supply never runs out, but Japanese buyers lead a scramble for stocks because of fears it might.

1980 - Iraq invades Iran. By the end of the year, North Sea crude Forties stands at a new high of $40 a barrel, a level not to be exceeded for 10 years.

1983 — The New York Mercantile Exchange launches crude futures trading.

1983 - OPEC attempts to introduce production quotas for member countries but with little success.

1986 - Prices crash in response to an oil glut and change in consumer habits with Brent dropping to a low of $8.75 a barrel. OPEC finally abandons its fixed pricing structure and cuts prices to try to win back market share. OPEC introduces production quota system.

1987 - The New York Mercantile Exchange says it will pursue a trading link with a London exchange and an evening trading session for oil futures.

1990-91 - Iraq’s invasion of Kuwait and the first Gulf War sends prices to a then all-time high of $41.90 a barrel.

1997 - OPEC agrees 10 percent rise in output ceiling, the first ceiling increase in 4 years, as Asia slides into economic downturn.

1998-99 - Asian economic crisis. Prices drop to single digits, with Brent falling below $10 a barrel at the end of 1998 and again in early 1999.

1999 - Third round of output cuts agreed upon in March, after previous output cuts agreed in collaboration with non-OPEC members Mexico and Norway, fails to halt price slide. Oil prices begin to recover.

2000 - Then OPEC president Venezuela announces “a price band mechanism” in March, dictating the group will automatically reduce supply if oil falls below and automatically increase output if it rises above a $22-$28 range for a reference basket of crudes.

The mechanism is quietly abandoned in 2005 and since then the group has preferred not to specify prices, although since the price crash and recession of 2008, it has indicated a range it considers comfortable for producers and consumers.

2001 - 9/11 attacks on the World Trade Centre in New York lead to a fall in the value of oil as the terror attacks rock the world’s largest economy and largest energy consumer.

2003 - U.S.-led invasion of Iraq temporarily removes 2.5 million barrels per day from the market. Just before the invasion, prices spike to $39.99.

The price strength temporarily fades, but rising demand growth, led by Asia, stokes a sustained bull-run across oil and other commodities from late 2003/2004 onwards.

2008 - On the first trading day of 2008, U.S. crude prices for the first time break the $100 a barrel barrier. The rally continues until July when U.S. crude reaches an all-time high of

$147.27.

Just before it peaks, the world’s leading oil exporter Saudi Arabia — concerned that overly high prices will derail the world economy and destroy demand — calls an emergency meeting in the kingdom’s commercial capital Jeddah in late June and promises to pump as much oil as customers want.

In the event, a collapse in the world economy and in world oil demand unravels the rally and by December 2008, prices head towards $30 a barrel.

In response, OPEC at a meeting in Oran, Algeria, announces a record output cut.

In the immediate aftermath, the oil market falls to a low of $32.40, its weakest in nearly five years, but subsequent OPEC output discipline drives prices higher. Since late 2009, they have traded in a range of roughly $70-$85, which OPEC has repeatedly said is acceptable for producers and consumers.

Ever since the Oran meeting, OPEC has maintained its output ceiling at 24.84 million barrels per day for its 11 members with output curbs.

Member countries have unofficially raised production by reducing compliance with agreed limits.

Sources: Reuters/Energy Information Administration (here)

Reporting by David Cutler, Alice Baghdjian and Barbara Lewis; editing by James Jukwey

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