ABSTRACT
This chapter focuses on the behavior of states themselves, or on the interaction between oil producers. It provides a discussion on the price and production policy of the Organization of the Petroleum Exporting Countries (OPEC) members. The discussion of the price and production policy of the OPEC members is organized into three periods. The first period starts with the TehranTripoli agreements of 1971 and lasts until the eve of the second oil-price shock around 1981. In this period price-setting dominated OPEC policy and cooperation. The second period centers on the establishment of the quotas in 1982-1983 and the following swing-producer policy of Saudi Arabia until 1985. This period is of crucial importance for understanding both the mistakes of the past and the future behavior of OPEC. The third period is from 1986 to present. The key problem in this period is the managing of the quota system, causing OPEC countries to abandon the ambition to set the oil price.
