The integrated structure of world trade under colonial systems which prevailed prior to World War I was characterized bya relatively free interchange of goods, labour and capital. Economic and political policies in the undeveloped areas were aimed at protecting the interests of olonial and metropolitan powers as an interdependent system. The disintegration of political colonialism that began with the end of that war did not necessarily bring economic nationalism with political independence since continued pressure was maintained to protect the resources necessary to perpetuate the economies of developed nations. The inevitable result was a final clash as to who, in fact, would have sovereignty over the natural resources in the undeveloped nations.
In the Middle East the major concessions were acquired under somewhat ridiculous terms and circumstances. Mutual equivalence of contractual advantage did not prevail and frequently decisionseffecting oil resources were beyond control of the individual states. Beginning with the Red Line Agreement in 1928 and progressing through the various concession participation since that time a virtual interlock of the major producing companies has developed.
Venezuela was the first to see the advantage of union among the major oil producing countries and sent delegates to the Middle East in the early 1950's. Unilateral reduction in crude oil prices totalling 28? per barrel in 1959 and 1960 by the companies without consultation with the host Governments intensified fears of continued price cutting. In September 1960 delegates of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela voted to create the Organization of Petroleum Exporting Countries.
The cut in crude oil price in 1959 and 1960 in addition to devaluation of the world reserve currencies has been a major concern of OPEC. Studies made by the U.S. Cabinet Task Force on Oil Imports set the disparity in price between Middle East oil and oil produced in the Gulf of Mexico area. Continued pressure can be expected for the increasing of posted prices by OPEC and major producing countries until the disparity is reduced to a more acceptable level.
Total proven recoverable reserves of crude oil throughout the word, with the exclusion of oil shales and tar sands, approximate 611 billion barrels. Of these reserves just over 100 billion barrels are directly controlled by the Eastern Block countries. Considering the remaining 511 billion barrels member countries of The Organization of Petroleum Exporting Countries or OPEC as it is more commonly known, control 415 billion barrels or 82% of the reserves. If camp followers of OPEC are also included the figures would jump to 460 billion barrels or 90% of the total world reserves outside Eastern Block countries. To go one step further if only reserves surplus to domestic needs are considered then OPEC, directly or indirectly influences almost 100% of these crude oil reserves. Of the 418 billion barrels directly controlled by OPEC countries 324 billion barrels are the reserves in Arab states with 70 billion barrels in Iran, 10 billion barrels in Indonesia and 14 billion barrels in Venezuela.