Organization of petroleum exporting countries
The Organization of Petroleum Exporting Countries or OPEC an organization of countries that contain a significant fraction of the world's oil reserves. Iran, Iraq, Kuwait, Saudi Arabia and Venezuela agreed in a conference in Baghdad, Iraq on September 10th-14th, 1960 to coordinate crude oil production. OPEC was trying to ensure a fair price for their exported oil and a steady supply to the market. These countries also have a fair amount of natural gas reserves as well. Because natural gas is harder to ship overseas, the oil has the bigger political infulence.
The significant amount of oil that OPEC produce means that they do play a significant role in the oil market (see OPEC (cartel) for more discussion). However, the influence is not as large as the cartel had hoped. The first problem that OPEC suffers from is that they do not control the majority of oil production in the world, this means that they don't have the market power that they had originally hoped that they would get. The share of the global oil supply that OPEC controls has fluctuated over time, while it has 81% (1200 billion barrels, 2015) of the world’s proven crude oil reserves it only produces about 40% of crude oil today (this number has fluctuated since its creation). To find out more about OPEC's oil reserves please see here.
Without the control of the market, OPEC has to compete with non-OPEC nations such as Canada, U.S, Norway, Mexico, Brazil and others. This means that OPEC countries have to compete with other global players who are free to operate in the market as they please, whereas OPEC nations have to coordinate with each other.
OPEC Members (and the year they joined OPEC)
- Algeria (1969)
- Ecuador (1973)
- Gabon (1975)
- Indonesia (1962)
- Iran (1960)
- Iraq (1960)
- Kuwait (1960)
- Libya (1962)
- Nigeria (1971)
- Qatar (1961)
- Saudi Arabia (1960)
- United Arab Emirates (1967)
- Venezuela (1960)
- OPEC (brief history)- This page explains the brief history, from its origin to the crisis it experienced until present.
- OPEC (cartel)- This pages examines the economics of the OPEC cartel both within the organization and in the global market.
- By DALIBRI - Own work, CC BY-SA 3.0, [Online], Available: https://commons.wikimedia.org/w/index.php?curid=20982621.
- OPEC. "OPEC: A Brief History." [Online], Available: http://www.opec.org/opec_web/en/about_us/24.htm, 2016 [Aug, 19, 2016].
- M. Parkin and R. Bade. Economics: Canada in the Global Environment. Toronto: Pearson, 2013, pp. 169.
- OPEC. "OPEC Share of World Crude Oil Reserves, 2015." [Online], Available: http://www.opec.org/opec_web/en/data_graphs/330.htm, 2016 [Aug 23, 2016].
- U.S Energy Information Administration. "What Drives Crude Oil Prices?" [Online], Available: https://www.eia.gov/finance/markets/supply-opec.cfm [Aug 23, 2016].
- Wikimedia Commons. [Online], Available: https://en.wikipedia.org/wiki/File:Flag_of_OPEC.svg [Aug 17, 2016]