The Foundation of OPEC

Abstract

As we have seen, signs of price weakness in the crude oil market had been evident way back in the early 1950s, but had been camouflaged by the political upheavals of the Korean and Suez crises. By 1958 the granting of substantial discounts off posted prices in arms-length sales to third parties had become widespread practice. Of course at that time the third-party market accounted for only a small proportion, probably no more than 10% of the whole, and sales between affiliates of the major integrated international companies, which represented the vast bulk of the market, continued in general to be invoiced at posted prices. But rumblings of complaint against the use of such prices in inter-affiliate transactions were already making themselves heard in some consuming countries, particularly those afflicted by balance of payments problems.