It is unclear to a economic novice like me why OPEC is not cutting down production and raising oil prices. I have read several journalists commenting upon this on the internet but perhaps an economist can explain this current fact better.
The OPEC scenario is quite well described by a market with Cournot Competition. That is, while collusion would lead the highest total profits to the sum of the participants, each invididual participant would gain by increasing his production a little bit.
Without observing the quantity of each participant and proper enforcement, that's the outcome the model predicts - and reality concurs.
To appreciate why OPEC can´t do this now, we have to understand a little better why they were able to do it in the 1970´s - temporarily at least. The received wisdom on the 70´s crisis is a little oversimplified.
There are two key things going on at that time, one was that US oil consumption was steadily increasing throughout the 60´s, which is what led to the crisis; the other was the fall out from the collapse of the Bretton Woods agreement in 1972 which had also led to oil being significantly mis-priced (too cheap in dollar terms essentially). The doubling of prices resulted from the combination of the two factors, not just from the OPEC oil sanctions.
Fast forward to 2015. The situation with respect to supply is now the reverse, due to fracking, oil supply is increasing with respect to demand, rather than dropping as it was back then. We don´t have any similar level of financial crisis to muddy the waters. OPEC could reduce their production, but they are a much lower percentage of total oil production than they were then, fracking is still increasing, so it´s unlikely to have much effect. Put all that together, and throw in that it didn´t work for very long back in the 70´s - the financial crisis was probably responsible for far more disruption than the oil sanctions actually were - and OPEC has no reason to try this.
This is especially the case when the financial dynamics behind fracking are considered. As the oil price drops more and more oil sources become unprofitable, and will either be shut down or put on hold, eventually restoring some kind of equilibrium to the market as the new supply/demand levels assert themselves.