ABSTRACT
This chapter describes Organization of the Petroleum Exporting Countries (OPEC) nations respond to a combination of three factors: the oil market, policy/political constraints, and physical constraints to oil production and exports. At any point in time, one of these factors is dominant, but it is a mistake to think that OPEC nations lose sight of the other two factors in their decisions. The power structure of OPEC has undergone considerable change in the last ten years. The non-OPEC oil exporters should keep in mind that without OPEC, they themselves will be forced to come together and carry the burden of oil market administration. As the events of the early 1970s gave OPEC worldwide recognition of its new power over the world's economic well-being, the power structure within the organization itself underwent a series of structural changes. Until the 1979 revolution in Iran, Saudi Arabia and Iran held the key to decisions within OPEC.
