Ever since the 1970s, Americans have cringed at the mention of OPEC. The term “OPEC” stands for the Organization of the Petroleum Exporting Countries, which includes major oil exporters Saudi Arabia, Kuwait, UAE, Iran, Iraq and 10 others.

It was in the mid- to late 1970s that OPEC oil embargos on exports to the U.S. helped lead to higher gas prices and long lines at the pump. Despite that history, OPEC has never been as powerful as Americans feared. Saudi Arabia dominates OPEC production, so OPEC has always had to follow the Saudi lead.

The turmoil in the 1970s was as much about U.S. price controls and tax policy blunders as OPEC embargoes. And when OPEC did set quotas, they were immediately violated by perennial export cheaters such as Iran. Today, OPEC is a shadow of its former self, which was blown out of proportion in any case. But there is a cartel that does control the oil market, as this article describes.

The new cartel consists of the “big three” oil producers, Saudi Arabia, Russia and the United States. Global oil production is about 80 million barrels per day. The U.S., Russia and Saudi Arabia produce about 10 million barrels per day each, which adds up to 37.5% of global production. The big three can force oil prices higher or lower simply by increasing or decreasing their combined output.

All other oil producers need to pump all the oil they can to meet their budgetary requirements. Those other producers can be helped or hurt by what the big three decide to do. This article details current efforts of the big three to mitigate the impact of sanctions on Iranian exports by increasing production themselves.

It’s also a timely reminder that the U.S. and Russia have much to gain from improved relations despite the noise about “Russian collusion” and the appetite for Russia bashing in the mainstream media.

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