Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On this day in 1960, Iraq, Iran, Kuwait, Venezuela and Saudi Arabia joined to form the Organization of the Petroleum Exporting Countries.
Where The Market Was: The Dow Jones Industrial Average closed at 605.69 and the S&P 500 traded at 55.44.
What Else Was Going On In The World? In 1960, John F. Kennedy became the youngest American president at 43. The U.S. officially entered the Vietnam War by sending 3,500 troops overseas. A gallon of gasoline cost 25 cents.
OPEC’s Beginning: The idea behind forming OPEC was to make sure petroleum policies among the top global producers were coordinated and beneficial to all members.
OPEC made its first major coordinated move in the early 1970s when the organization decided to raise the price of crude out from around $3/bbl to roughly $12/bbl as a result of the U.S. support of Israel during the Arab-Israeli conflict.
The 1970s embargo drove the U.S. and other oil importers to increase their efforts to invest in domestic production. By the late 1980s, global overproduction of oil resulted in a supply glut that drove Brent crude prices below $9/bbl.
Throughout the years, OPEC has enacted production quotas and cuts with varying degrees of success in an effort to balance the global oil market. Today, OPEC membership has grown to 15 countries which combine to account for about 44% of global oil production.