The Organization of the Petroleum Exporting Countries, or OPEC, is made up of 12 key oil-exporting nations. Established in 1960, OPEC aims to align the petroleum policies of its members and offer them technical and economic support.
As a cartel, OPEC regulates oil supply to influence global prices and stabilize economic conditions in both producing and consuming nations. The member countries include Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates, and Venezuela.
Learn more about OPEC
The Organization of the Petroleum Exporting Countries calls itself a permanent intergovernmental organization. Its main goal is to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets.” This helps consumers have a steady oil supply while giving petroleum producers a reliable income.
OPEC is based in Vienna, Austria, where its secretariat, which is the executive body, handles daily operations. The organization was founded in Baghdad in September 1960 by its original members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Today, it has 12 member countries.
The top executive of The Organization of the Petroleum Exporting Countries is the secretary-general, who serves as the CEO. Mohammad Sanusi Barkindo from Nigeria took on this role for a three-year term starting June 2, 2016, and he was re-elected for another three years in July 2019.
Pros and Cons
Having a cartel like OPEC in the crude oil industry comes with a bunch of benefits. For starters, it encourages collaboration among member countries, which can help ease political tensions. Plus, since the main aim of the organization is to stabilize oil production and prices, it can also impact production levels in other countries.
However, OPEC’s market influence has faced a lot of criticism. With its member nations controlling most of the crude oil reserves, the organization wields significant power in these markets. As a cartel, OPEC’s goal is to keep oil prices elevated while also preserving their market share.
What is OPEC+?
Back in December 2016, OPEC teamed up with some oil-exporting countries that weren’t part of the group, leading to the creation of what we now call OPEC+, or OPEC Plus. Key players in OPEC+ include Russia, Mexico, and Kazakhstan. By collaborating with more oil-exporting nations, the organization boosts its impact on global energy prices and the world economy.
Conclusion
OPEC is an organization that manages the production, supply, and pricing of oil in the global market. Founded in 1960, it consists of 12 different oil-producing nations. Its reach has grown to include OPEC+, a broader coalition that oversees 90% of the world’s oil supply.
Although OPEC’s stated aim is to stabilize oil prices, it frequently faces criticism for raising prices to benefit its member countries. However, it also encounters various challenges, including geopolitical conflicts, oversupply issues, declining demand, and the rise of new green technologies.