History and impact
Post-WWII situationIn 1949, United States of Venezuela, Venezuela and Pahlavi dynasty, Iran took the earliest steps in the direction of OPEC, by inviting , and to improve communication among petroleum-exporting nations as the world recovered from World War II. At the time, some of the world's largest List of oil fields, oil fields were just entering production in the Middle East. The United States had established the Interstate Oil Compact Commission to join the Texas Railroad Commission in limiting overproduction. The US was simultaneously the world's largest producer and consumer of oil; and the world market was dominated by a group of multinational companies known as the " ", five of which were headquartered in the US following the breakup of John D. Rockefeller's original Standard Oil monopoly. Oil-exporting countries were eventually motivated to form OPEC as a counterweight to this concentration of political and economic power.
1959–1960 anger from exporting countriesIn February 1959, as new supplies were becoming available, the multinational oil companies (MOCs) unilaterally reduced their posted prices for Venezuelan and Middle Eastern crude oil by 10 percent. Weeks later, the Arab League's first Arab Petroleum Congress convened in Cairo, Egypt, where the influential journalist Wanda Jablonski introduced Saudi Arabia's Abdullah Tariki to Venezuela's observer Juan Pablo Pérez Alfonzo, representing the two then-largest oil-producing nations outside the United States and the Soviet Union. Both oil ministers were angered by the price cuts, and the two led their fellow delegates to establish the Maadi Pact or Gentlemen's Agreement, calling for an "Oil Consultation Commission" of exporting countries, to which MOCs should present price-change plans. Jablonski reported a marked hostility toward the West and a growing outcry against "absentee landlordism" of the MOCs, which at the time controlled all oil operations within the exporting countries and wielded enormous political influence. In August 1960, ignoring the warnings, and with the US favoring Canadian and Mexican oil for strategic reasons, the MOCs again unilaterally announced significant cuts in their posted prices for Middle Eastern crude oil.
1960–1975 founding and expansionThe following month, during 10–14 September 1960, the Baghdad Conference was held at the initiative of Tariki, Pérez Alfonzo, and Iraqi prime minister Abd al-Karim Qasim, whose country had skipped the 1959 congress. Government representatives from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in to discuss ways to increase the price of crude oil produced by their countries, and ways to respond to unilateral actions by the MOCs. Despite strong US opposition: "Together with Arab and non-Arab producers, Saudi Arabia formed the Organization of Petroleum Export Countries (OPEC) to secure the best price available from the major oil corporations." The Middle Eastern members originally called for OPEC headquarters to be in Baghdad or Beirut, but Venezuela argued for a neutral location, and so the organization chose Geneva, Switzerland. On 1 September 1965, OPEC moved to , , after Switzerland declined to extend diplomatic privileges. During 1961–1975, the five founding nations were joined by Qatar (1961), Indonesia (1962–2008, rejoined 2014–2016), (1962), United Arab Emirates (originally just the Emirate of Abu Dhabi, 1967), (1969), (1971), Ecuador (1973–1992, 2007–2020), and (1975–1994, rejoined 2016). By the early 1970s, OPEC's membership accounted for more than half of worldwide oil production. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo, OPEC's Acting Secretary General in 2006, urged his African neighbors Angola and Sudan to join, and Equatorial Guinea in 2017. Since the 1980s, representatives from Egypt, Mexico, Norway, Oman, Russia, and other oil-exporting nations have attended many OPEC meetings as observers, as an informal mechanism for coordinating policies. In 1971, an accord was signed between major oil companies and members of OPEC doing business in the Mediterranean Sea region, called the ''Tripoli Agreement''. The agreement, signed on 2 April 1971, raised oil prices and increased producing countries' profit shares.Marius Vassiliou (2009). Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press. .
1973–1974 oil embargoIn October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC, consisting of the Arab majority of OPEC plus Egypt and Syria) declared significant production cuts and an oil embargo against the United States and other industrialized nations that supported Israel in the Yom Kippur War. A 1967 Oil Embargo, previous embargo attempt was largely ineffective in response to the Six-Day War in 1967. However, in 1973, the result was a sharp rise in oil prices and OPEC revenues, from US$3/bbl to US$12/bbl, and an emergency period of energy rationing, intensified by panic reactions, a declining trend in US oil production, currency devaluations, and a lengthy UK coal-miners dispute. For a time, the UK imposed an emergency Three-Day Week, three-day workweek. Seven European nations banned non-essential Sunday driving. US gas stations limited the amount of gasoline that could be dispensed, closed on Sundays, and restricted the days when gasoline could be purchased, based on license plate numbers. Even after the embargo ended in March 1974, following intense diplomatic activity, prices continued to rise. The world experienced a 1973–75 recession, global economic recession, with stagflation, unemployment and inflation surging simultaneously, steep declines in stock and bond prices, major shifts in trade balances and petrodollar recycling, petrodollar flows, and a dramatic end to the Post–World War II economic expansion, post-WWII economic boom. The 1973–1974, oil embargo had lasting effects on the United States and other industrialized nations, which established the International Energy Agency in response, as well as national Global strategic petroleum reserves, emergency stockpiles designed to withstand months of future supply disruptions. Oil Energy conservation, conservation efforts included lower speed limits on highways, smaller and more Efficient energy use, energy-efficient cars and appliances, year-round daylight saving time, reduced usage of HVAC, heating and air-conditioning, better building insulation, insulation, increased support of mass transit, and greater emphasis on coal, natural gas, ethanol fuel, ethanol, nuclear power, nuclear and other alternative energy sources. These long-term efforts became effective enough that US oil consumption would rise only 11 percent during 1980–2014, while real GDP rose 150 percent. But in the 1970s, OPEC nations demonstrated convincingly that their oil could be used as both a political and economic weapon against other nations, at least in the short term. But the embargo also meant that a section of the Non-Aligned Movement saw power as a source of hope for their developing countries. The Algerian president Houari Boumédiène expressed this hope in a speech at the UN's 6th Special Session in April 1974:
1975–1980 Special Fund, now OFIDOPEC's international aid activities date from well before the 1973–1974 oil price surge. For example, the Kuwait Fund for Arab Economic Development has operated since 1961. In the years after 1973, as an example of so-called "checkbook diplomacy", certain Arab nations have been among the world's largest providers of foreign aid, and OPEC added to its goals the selling of oil for the socio-economic growth of poorer nations. The OPEC Special Fund was conceived in Algiers, Algeria, in March 1975, and was formally established the following January. "A Solemn Declaration 'reaffirmed the natural solidarity which unites OPEC countries with other developing countries in their struggle to overcome underdevelopment,' and called for measures to strengthen cooperation between these countries... [The OPEC Special Fund's] resources are additional to those already made available by OPEC states through a number of bilateral and multilateral channels." The Fund became an official international development agency in May 1980 and was renamed the OPEC Fund for International Development (OFID), with Permanent Observer status at the United Nations.
1975 hostage siegeOn 21 December 1975, Saudi Arabia's Ahmed Zaki Yamani, Iran's Jamshid Amuzegar, and the other OPEC oil ministers were taken hostage at their semi-annual conference in Vienna, Austria. The attack, which killed three non-ministers, was orchestrated by a six-person team led by Venezuelan militant "Carlos the Jackal", and which included Gabriele Kröcher-Tiedemann and Hans-Joachim Klein. The self-named "Arm of the Arab Revolution" group declared its goal to be the liberation of Palestine (region), Palestine. Carlos planned to take over the conference by force and hold for ransom all eleven attending oil ministers, except for Yamani and Amuzegar who were to be executed. Carlos arranged bus and plane travel for his team and 42 of the original 63 hostages, with stops in Algiers and Tripoli, planning to fly eventually to Some time after the attack, Carlos's accomplices revealed that the operation was commanded by Wadie Haddad, a founder of the Popular Front for the Liberation of Palestine. They also claimed that the idea and funding came from an Arab president, widely thought to be Muammar al-Gaddafi of Libya, itself an OPEC member. Fellow militants Bassam Abu Sharif and Klein claimed that Carlos received and kept a ransom between US$20 million and US$50 million from "an Arab president". Carlos claimed that Saudi Arabia paid ransom on behalf of Iran, but that the money was "diverted en route and lost by the Revolution". He was finally captured in 1994 and is serving life sentences for at least 16 other murders.
1979–1980 oil crisis and 1980s oil glutIn response to a wave of oil nationalizations and the high prices of the 1970s, industrial nations took steps to reduce their dependence on OPEC oil, especially after prices reached new peaks approaching US$40/bbl in 1979–1980 when the Iranian Revolution and Iran–Iraq War disrupted regional stability and oil supplies. Electric utilities worldwide switched from oil to coal, natural gas, or nuclear power; national governments initiated multibillion-dollar research programs to develop alternatives to oil; and commercial exploration developed major non-OPEC oilfields in Siberia, Alaska, the North Sea, and the Gulf of Mexico. By 1986, daily worldwide demand for oil dropped by 5 million barrels, non-OPEC production rose by an even-larger amount, and OPEC's market share sank from approximately 50 percent in 1979 to less than 30 percent in 1985. Illustrating the volatile multi-year timeframes of typical market cycles for natural resources, the result was a six-year decline in the price of oil, which culminated by plunging more than half in 1986 alone. As one oil analyst summarized succinctly: "When the price of something as essential as oil spikes, humanity does two things: finds more of it and finds ways to use less of it." To combat falling revenue from oil sales, in 1982 Saudi Arabia pressed OPEC for audited national production quotas in an attempt to limit output and boost prices. When other OPEC nations failed to comply, Saudi Arabia first slashed its own production from 10 million barrels daily in 1979–1981 to just one-third of that level in 1985. When even this proved ineffective, Saudi Arabia reversed course and flooded the market with cheap oil, causing prices to fall below US$10/bbl and higher-cost producers to become unprofitable. Faced with increasing economic hardship (which ultimately contributed to the collapse of the Soviet bloc in 1989), the "Free rider problem, free-riding" oil exporters that had previously failed to comply with OPEC agreements finally began to limit production to shore up prices, based on painstakingly negotiated national quotas that sought to balance oil-related and economic criteria since 1986. (Within their sovereign-controlled territories, the national governments of OPEC members are able to impose production limits on both government-owned and private oil companies.) Generally when OPEC production targets are reduced, oil prices increase.
1990–2003 ample supply and modest disruptionsLeading up to his August 1990 Invasion of Kuwait, Iraqi President Saddam Hussein was pushing OPEC to end overproduction and to send oil prices higher, in order to help OPEC members financially and to accelerate rebuilding from the 1980–1988 Iran–Iraq War. But these two Iraqi wars against fellow OPEC founders marked a low point in the cohesion of the organization, and oil prices subsided quickly after the short-term supply disruptions. The September 2001 September 11 attacks, Al Qaeda attacks on the US and the March 2003 US invasion of Iraq had even milder short-term impacts on oil prices, as Saudi Arabia and other exporters again cooperated to keep the world adequately supplied. In the 1990s, OPEC lost its two newest members, who had joined in the mid-1970s. Ecuador withdrew in December 1992, because it was unwilling to pay the annual US$2 million membership fee and felt that it needed to produce more oil than it was allowed under the OPEC quota, although it rejoined in October 2007. Similar concerns prompted Gabon to suspend membership in January 1995; it rejoined in July 2016. Iraq has remained a member of OPEC since the organization's founding, but Iraqi production was not a part of OPEC quota agreements from 1998 to 2016, due to the country's daunting political difficulties. Lower demand triggered by the 1997–1998 Asian financial crisis saw the price of oil fall back to 1986 levels. After oil slumped to around US$10/bbl, joint diplomacy achieved a gradual slowing of oil production by OPEC, Mexico and Norway. After prices slumped again in Nov. 2001, OPEC, Norway, Mexico, Russia, Oman and Angola agreed to cut production on 1 Jan. 2002 for 6 months. OPEC contributed 1.5 million barrels a day (mbpd) to the approximately 2 mbpd of cuts announced. In June 2003, the International Energy Agency (IEA) and OPEC held their first joint workshop on energy issues. They have continued to meet regularly since then, "to collectively better understand trends, analysis and viewpoints and advance market transparency and predictability."
2003–2011 volatilityWidespread insurgency and sabotage occurred during the 2003–2008 height of the History of Iraq (2003–2011)#Sabotage, American occupation of Iraq, coinciding with rapidly increasing oil demand from China and Commodity market, commodity-hungry investors, recurring Conflict in the Niger Delta, violence against the Nigerian oil industry, and dwindling spare capacity as a cushion against Peak oil, potential shortages. This combination of forces prompted a sharp rise in oil prices to levels far higher than those previously targeted by OPEC. Price volatility reached an extreme in 2008, as WTI crude oil surged to a record US$147/bbl in July and then plunged back to US$32/bbl in December, during the Great Recession, worst global recession since World War II. OPEC's annual oil export revenue also set a new record in 2008, estimated around US$1 trillion, and reached similar annual rates in 2011–2014 (along with extensive petrodollar recycling activity) before plunging again. By the time of the 2011 Libyan Civil War and Arab Spring, OPEC started issuing explicit statements to counter "excessive speculation" in oil futures markets, blaming financial speculators for increasing volatility beyond market fundamentals. In May 2008, Indonesia announced that it would leave OPEC when its membership expired at the end of that year, having become a net importer of oil and being unable to meet its production quota. A statement released by OPEC on 10 September 2008 confirmed Indonesia's withdrawal, noting that OPEC "regretfully accepted the wish of Indonesia to suspend its full membership in the organization, and recorded its hope that the country would be in a position to rejoin the organization in the not-too-distant future."
2008 production disputeThe differing economic needs of OPEC member states often affect the internal debates behind OPEC production quotas. Poorer members have pushed for production cuts from fellow members, to increase the price of oil and thus their own revenues. These proposals conflict with Saudi Arabia's stated long-term strategy of being a partner with the world's economic powers to ensure a steady flow of oil that would support economic expansion. Part of the basis for this policy is the Saudi concern that overly expensive oil or unreliable supply will drive industrial nations to conserve energy and develop alternative fuels, curtailing the worldwide demand for oil and eventually leaving unneeded barrels in the ground. To this point, Saudi Oil Minister Yamani famously remarked in 1973: "The Stone Age didn't end because we ran out of stones." On 10 September 2008, with oil prices still near US$100/bbl, a production dispute occurred when the Saudis reportedly walked out of a negotiating session where rival members voted to reduce OPEC output. Although Saudi delegates officially endorsed the new quotas, they stated anonymously that they would not observe them. ''The New York Times'' quoted one such delegate as saying: "Saudi Arabia will meet the market's demand. We will see what the market requires and we will not leave a customer without oil. The policy has not changed." Over the next few months, oil prices plummeted into the $30s, and did not return to $100 until the Libyan Civil War in 2011.
2014–2017 oil glutDuring 2014–2015, OPEC members consistently exceeded their production ceiling, and China experienced a slowdown in economic growth. At the same time, US oil production nearly doubled from 2008 levels and approached the world-leading "swing producer" volumes of Saudi Arabia and Russia, due to the substantial long-term improvement and spread of tight oil, shale "fracking" technology in response to the years of record oil prices. These developments led in turn to a plunge in US oil import requirements (moving closer to U.S. energy independence, energy independence), a record volume of worldwide oil inventory, inventories, and a collapse in oil prices that continued into early 2016. In spite of global oversupply, on 27 November 2014 in Vienna, Saudi Oil Minister Ali Al-Naimi blocked appeals from poorer OPEC members for production cuts to support prices. Naimi argued that the oil market should be left to rebalance itself competitively at lower price levels, strategically rebuilding OPEC's long-term market share by ending the profitability of high-cost US shale oil production. As he explained in an interview:
Is it reasonable for a highly efficient producer to reduce output, while the producer of poor efficiency continues to produce? That is crooked logic. If I reduce, what happens to my market share? The price will go up and the Russians, the Brazilians, US shale oil producers will take my share... We want to tell the world that high-efficiency producing countries are the ones that deserve market share. That is the operative principle in all capitalist countries... One thing is for sure: Current prices [roughly US$60/bbl] do not support all producers.A year later, when OPEC met in Vienna on 4 December 2015, the organization had exceeded its production ceiling for 18 consecutive months, US oil production had declined only slightly from its peak, world markets appeared to be oversupplied by at least 2 million barrels per day despite Libyan Civil War (2014–present), war-torn Libya pumping 1 million barrels below capacity, oil producers were making major adjustments to withstand prices as low as the $40s, Indonesia was rejoining the export organization, Iraqi production had surged after years of disorder, Iranian output was poised to rebound with the lifting of Sanctions against Iran, international sanctions, hundreds of world leaders at the Paris Climate Agreement were committing to limit carbon emissions from fossil fuels, and Solar power#Economics, solar technologies were becoming steadily more competitive and prevalent. In light of all these market pressures, OPEC decided to set aside its ineffective production ceiling until the next ministerial conference in June 2016. By 20 January 2016, the OPEC Reference Basket was down to US$22.48/bbl – less than one-fourth of its high from June 2014 ($110.48), less than one-sixth of its record from July 2008 ($140.73), and back below the April 2003 starting point ($23.27) of its historic run-up. As 2016 continued, the oil glut was partially trimmed with significant production offline in the US, Canada, Libya, Nigeria and China, and the basket price gradually rose back into the $40s. OPEC regained a modest percentage of market share, saw the cancellation of many competing drilling projects, maintained the status quo at its June conference, and endorsed "prices at levels that are suitable for both producers and consumers", although many producers were still experiencing serious economic difficulties.
2017–2020 production cut and OPEC+As OPEC members grew weary of a multi-year supply-contest with diminishing returns and shrinking financial reserves, the organization finally attempted its first production cut since 2008. Despite many political obstacles, a September 2016 decision to trim approximately 1 million barrels per day was codified by a new quota-agreement at the November 2016 OPEC conference. The agreement (which exempted disruption-ridden members Libya and Nigeria) covered the first half of 2017 – alongside promised reductions from Russia and ten other non-members, offset by expected increases in the US shale-sector, Libya, Nigeria, #Spare capacity, spare capacity, and surging late-2016 OPEC production before the cuts took effect. Indonesia announced another "temporary suspension" of its OPEC membership rather than accepting the organization's requested 5-percent production-cut. Prices fluctuated around US$50/bbl, and in May 2017 OPEC decided to extend the new quotas through March 2018, with the world waiting to see if and how the oil-inventory glut might be fully siphoned-off by then. Longtime oil analyst Daniel Yergin "described the relationship between OPEC and shale as 'mutual coexistence', with both sides learning to live with prices that are lower than they would like." These production cut deals with non-OPEC countries are generally referred to as OPEC+. In December 2017, Russia and OPEC agreed to extend the production cut of 1.8million barrels/day until the end of 2018. Qatar announced it would withdraw from OPEC effective 1 January 2019. According to the New York Times, this constitutes a strategic response to the ongoing Qatar diplomatic crisis, Qatar blockade by
2020 Saudi-Russian price warIn early March 2020, OPEC officials presented an ultimatum to Russia to cut production by 1.5% of world supply. Russia, which foresaw continuing cuts as American shale oil production increased, rejected the demand, ending the three-year partnership between OPEC and major non-OPEC providers. Another factor was Economic impact of the COVID-19 pandemic, weakening global demand resulting from the COVID-19 pandemic. This also resulted in 'OPEC plus' failing to extend the agreement cutting 2.1 million barrels per day that was set to expire at the end of March. Saudi Arabia, which has absorbed a disproportionate amount of the cuts to convince Russia to stay in the agreement, notified its buyers on 7 March that they would raise output and discount their oil in April. This prompted a Brent crude price crash of more than 30% before a slight recovery and Black Monday (2020), widespread turmoil in financial markets. Several pundits saw this as a 2020 Russia–Saudi Arabia oil price war, Saudi-Russian price war, or game of chicken which cause the "other side to blink first". Saudi Arabia had in March 2020 $500 billion of foreign exchange reserves, while at that time Russia's reserves were $580 billion. The debt-to-GDP ratio of the Saudis was 25%, while the Russian ratio was 15%. Another remarked that the Saudis can produce oil at as low a price as $3 per barrel, whereas Russia needs $30 per barrel to cover production costs. Another analyst claims that "it’s about assaulting the Western economy, especially America’s." In order to ward of from the oil exporters price war which can make shale oil production uneconomical, US may protect its crude oil market share by passing the NOPEC bill. In April 2020, OPEC and a group of other oil producers, including Russia, agreed to extend production cuts until the end of July. The cartel and its allies agreed to cut oil production in May and June by 9.7 million barrels a day, equal to around 10% of global output, in an effort to prop up prices, which had previously 2020 Russia–Saudi Arabia oil price war, fallen to record lows.
Current member countriesAs of January 2020, OPEC has 13 member countries: five in the Middle East (Western Asia), seven in Africa, and one in South America. According to the U.S. Energy Information Administration (EIA), OPEC's combined rate of oil production (including natural-gas condensate, gas condensate) represented 44% of the world's total in 2016, and OPEC accounted for 81.5% of the world's "proven" oil reserves. Approval of a new member country requires agreement by three-quarters of OPEC's existing members, including all five of the founders. In October 2015, Sudan formally submitted an application to join, but it is not yet a member. Qatar left OPEC on 1 January 2019, after joining the organization in 1961, to focus on natural gas production, of which it is the world's largest exporter in the form of Liquefied natural gas, liquified natural gas (LNG). Ecuador announced that it would leave OPEC on 1 January 2020. Ecuador's Ministry of Energy and Non-Renewable Natural Resources released an official statement on 2 January 2020 which confirmed that Ecuador had left OPEC.
Lapsed membersFor countries that export petroleum at relatively low volume, their limited negotiating power as OPEC members would not necessarily justify the burdens imposed by OPEC production quotas and membership costs. Ecuador withdrew from OPEC in December 1992, because it was unwilling to pay the annual US$2 million membership fee and felt that it needed to produce more oil than it was allowed under its OPEC quota at the time, then rejoined in October 2007 before leaving again in January 2020. Similar concerns prompted to suspend membership in January 1995; it rejoined in July 2016. In May 2008, Indonesia announced that it would leave OPEC when its membership expired at the end of that year, having become a net importer of oil and being unable to meet its production quota. It rejoined the organization in January 2016, but announced another "temporary suspension" of its membership at year-end when OPEC requested a 5% production cut. Some commentators consider the United States to have been a de facto member of OPEC during its formal History of Iraq (2003–2011), occupation of Iraq, due to its leadership of the Coalition Provisional Authority, which governed the country in 2003–2004. However, no U.S. representative attended OPEC meetings during this period in an official capacity.
OPEC+ membersIn addition to formal OPEC members, 10 additional oil exporting countries, led by Russia, form the OPEC+ cartel, which since 2016 cooperate in fixing the global crude oil prices by agreeing to production quotas that keep global production below demand/consumption. OPEC+ countries are crticised as encouraging unnecessary excess capital investment in the global oil sector instead of promoting cheaper oil production at lower capital investment.
ObserversSince the 1980s, representatives from Egypt, Mexico, Norway, Oman, Russia, and other oil-exporting nations have attended many OPEC meetings as observers. This arrangement serves as an informal mechanism for coordinating policies.
Vienna GroupA number of non-OPEC member countries also participate in the organisation's initiatives such as voluntary supply cuts in order to further bind policy objectives between OPEC and non-OPEC members. This loose grouping of countries includes: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.
Leadership and decision-makingThe OPEC Conference is the supreme authority of the organization, and consists of delegations normally headed by the oil ministers of member countries. The chief executive of the organization is the List of Secretaries General of OPEC, OPEC Secretary General. The Conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary. It generally operates on the principles of unanimity and "one member, one vote", with each country paying an equal membership fee into the annual budget. However, since Saudi Arabia is by far the largest and most-profitable oil exporter in the world, with enough capacity to function as the traditional swing producer to balance the global market, it serves as "OPEC's de facto leader".
International cartelAt various times, OPEC members have displayed apparent anti-competitive cartel behavior through the organization's agreements about oil production and price levels. In fact, economists often cite OPEC as a textbook example of a cartel that cooperates to reduce market competition, as in this definition from OECD's ''Glossary of Industrial Organisation Economics and Competition Law'': OPEC members strongly prefer to describe their organization as a modest force for market stabilization, rather than a powerful anti-competitive cartel. In its defense, the organization was founded as a counterweight against the previous "
ConflictsOPEC often has difficulty agreeing on policy decisions because its member countries differ widely in their oil export capacities, production costs, reserves, geological features, population, economic development, budgetary situations, and political circumstances. Indeed, over the course of market cycles, oil reserves can themselves become a source of serious conflict, instability and imbalances, in what economists call the "Resource curse#Political effects, natural resource curse". A further complication is that Religious war, religion-linked List of conflicts in the Middle East, conflicts in the Middle East are recurring features of the geopolitical landscape for this oil-rich region. Internationally important conflicts in OPEC's history have included the Six-Day War (1967), Yom Kippur War (1973), a OPEC siege, hostage siege directed by Palestinian militants (1975), the Iranian Revolution (1979), Iran–Iraq War (1980–1988), Gulf War, Iraqi occupation of Kuwait (1990–1991), September 11 attacks by mostly Saudi hijackers (2001), History of Iraq (2003–2011), American occupation of Iraq (2003–2011), Conflict in the Niger Delta (2004–present), Arab Spring (2010–2012), Libyan Crisis (2011–present), and international Embargo against Iran (2012–2016). Although events such as these can temporarily disrupt oil supplies and elevate prices, the frequent disputes and instabilities tend to limit OPEC's long-term cohesion and effectiveness.
Market informationAs one area in which OPEC members have been able to cooperate productively over the decades, the organization has significantly improved the quality and quantity of information available about the international oil market. This is especially helpful for a natural-resource industry whose smooth functioning requires months and years of careful planning.
Publications and researchIn April 2001, OPEC collaborated with five other international organizations (Asia-Pacific Economic Cooperation, APEC, Eurostat, International Energy Agency, IEA, , United Nations Statistics Division, UNSD) to improve the availability and reliability of oil data. They launched the Joint Oil Data Exercise, which in 2005 was joined by International Energy Forum, IEF and renamed the Joint Organisations Data Initiative (JODI), covering more than 90% of the global oil market. Gas Exporting Countries Forum, GECF joined as an eighth partner in 2014, enabling JODI also to cover nearly 90% of the global market for natural gas. Since 2007, OPEC has published the "World Oil Outlook" (WOO) annually, in which it presents a comprehensive analysis of the global oil industry including medium- and long-term projections for supply and demand. OPEC also produces an "Annual Statistical Bulletin" (ASB), and publishes more-frequent updates in its "Monthly Oil Market Report" (MOMR) and "OPEC Bulletin".
Crude oil benchmarksA "crude oil benchmark" is a standardized Petroleum#Classification, petroleum product that serves as a convenient reference price for buyers and sellers of crude oil, including standardized contracts in major futures markets since 1983. Benchmarks are used because oil prices differ (usually by a few dollars per barrel) based on variety, grade, delivery date and location, and other legal requirements. The OPEC Reference Basket, OPEC Reference Basket of Crudes has been an important benchmark for oil prices since 2000. It is calculated as a weighted average of prices for petroleum blends from the OPEC member countries: Saharan Blend (Algeria), Girassol (Angola), Djeno (Republic of the Congo) Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Arab Light (Saudi Arabia), Murban (UAE), and Merey (Venezuela). Brent Crude, North Sea Brent Crude Oil is the leading benchmark for Atlantic basin crude oils, and is used to price approximately two-thirds of the world's traded crude oil. Other well-known benchmarks are West Texas Intermediate (WTI), Dubai Crude, DME Oman Crude Oil Futures Contract, Oman Crude, and Urals oil.
Spare capacityThe US Energy Information Administration, the statistical arm of the US Department of Energy, defines spare capacity for crude oil market management "as the volume of production that can be brought on within 30 days and sustained for at least 90 days ... OPEC spare capacity provides an indicator of the world oil market's ability to respond to potential crises that reduce oil supplies." In November 2014, the International Energy Agency (IEA) estimated that OPEC's "effective" spare capacity, adjusted for ongoing disruptions in countries like Libya and Nigeria, was and that this number would increase to a peak in 2017 of . By November 2015, the IEA changed its assessment "with OPEC's spare production buffer stretched thin, as Saudi Arabia – which holds the lion's share of excess capacity – and its [Persian] Gulf neighbours pump at near-record rates."
See also* Energy diplomacy * List of countries by oil exports * List of country groupings * List of intergovernmental organizations * Oligopoly
Further reading* Evans, John (1986). ''OPEC, Its Member States and the World Energy Market''. . * Fesharaki, Fereidun (1983). ''OPEC, the Gulf, and the World Petroleum Market: A Study in Government Policy and Downstream Operations''. . * Garavini, Giuliano. (2019).