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The Organization of the Petroleum Exporting Countries (OPEC, ) is a
cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mo ...
of countries. Founded on 14 September 1960 in
Baghdad Baghdad (; ar, بَغْدَاد , ) is the capital of Iraq and the second-largest city in the Arab world after Cairo. It is located on the Tigris near the ruins of the ancient city of Babylon and the Sassanid Persian capital of Ctesiphon ...
by the first five members ( Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has, since 1965, been headquartered in Vienna, Austria, although Austria is not an OPEC member state. , the 13 member countries accounted for an estimated 44 percent of global oil production and 81.5 % of the world's proven oil reserves, giving OPEC a major influence on global oil prices that were previously determined by the so-called " Seven Sisters" grouping of multinational oil companies. The formation of OPEC marked a turning point toward national sovereignty over natural resources, and OPEC decisions have come to play a prominent role in the global oil market and international relations. The effect can be particularly strong when wars or
civil disorder Civil disorder, also known as civil disturbance, civil unrest, or social unrest is a situation arising from a mass act of civil disobedience (such as a demonstration, riot, strike, or unlawful assembly) in which law enforcement has difficulty m ...
s lead to extended interruptions in supply. In the 1970s, restrictions in oil production led to a dramatic rise in oil prices and in the revenue and wealth of OPEC, with long-lasting and far-reaching consequences for the
global economy The world economy or global economy is the economy of all humans of the world, referring to the global economic system, which includes all economic activities which are conducted both within and between nations, including production, consumption ...
. In the 1980s, OPEC began setting production targets for its member nations; generally, when the targets are reduced, oil prices increase. This has occurred most recently from the organization's 2008 and 2016 decisions to trim oversupply. Economists have characterized OPEC as a textbook example of a
cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mo ...
that cooperates to reduce market competition, but one whose consultations are protected by the doctrine of state immunity under international law. In the 1960s and 1970s, OPEC successfully restructured the global oil production system so that decision-making authority and the vast majority of profits is in the hands of oil-producing countries. Since the 1980s, OPEC has had a limited impact on world oil supply and price stability, as there is frequent cheating by members on their commitments to one another, and as member commitments reflect what they would do even in the absence of OPEC.
Algeria ) , image_map = Algeria (centered orthographic projection).svg , map_caption = , image_map2 = , capital = Algiers , coordinates = , largest_city = capital , relig ...
,
Angola , national_anthem = " Angola Avante"() , image_map = , map_caption = , capital = Luanda , religion = , religion_year = 2020 , religion_ref = , coordina ...
,
Equatorial Guinea Equatorial Guinea ( es, Guinea Ecuatorial; french: Guinée équatoriale; pt, Guiné Equatorial), officially the Republic of Equatorial Guinea ( es, link=no, República de Guinea Ecuatorial, french: link=no, République de Guinée équatoria ...
, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates and Venezuela. Meanwhile, Ecuador, Indonesia and Qatar are former OPEC members. A larger group called OPEC+ was formed in late 2016 to have more control on the global crude oil market.


Organization and structure

In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil production in favor of oil-producing states and away from an oligopoly of dominant Anglo-American oil firms (the Seven Sisters). Coordination among oil-producing states within OPEC made it easier for them to nationalize oil production and structure oil prices in their favor without incurring punishment by Western governments and firms. Prior to the creation of OPEC, individual oil-producing states were punished for taking steps to alter the governing arrangements of oil production within their borders. States were coerced militarily (e.g. in 1953, the US-UK-sponsored a coup against Mohammad Mosaddegh after he nationalized Iran's oil production) or economically (e.g. the Seven Sisters slowed down oil production in one non-compliant state and ramped up oil production elsewhere) when acted contrary to the interests of the Seven Sisters and their governments. The organizational logic that underpins OPEC is that it is in the collective interest of its members to limit the world oil supply in order to reap higher prices. However, the main problem within OPEC is that it is individually rational for members to cheat on commitments and produce as much oil as possible. Political scientist Jeff Colgan has argued that OPEC has since the 1980s largely failed to achieve its goals (limits on world oil supply, stabilized prices, and raising of long-term average revenues). He finds that members have cheated on 96% of their commitments. To the extent that member states comply with their commitments, it is because the commitments reflect what they would do even if OPEC did not exist. One large reason for the frequent cheating is that OPEC does not punish members for non-compliance with commitments.


Leadership and decision-making

The 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 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 cartel

At various times, OPEC members have displayed apparent anti-competitive
cartel A cartel is a group of independent market participants who collude with each other in order to improve their profits and dominate the market. Cartels are usually associations in the same sphere of business, and thus an alliance of rivals. Mo ...
behavior through the organization's agreements about oil production and price levels. 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 " Seven Sisters" cartel of multinational oil companies, and non-OPEC energy suppliers have maintained enough market share for a substantial degree of worldwide competition. Moreover, because of an economic " prisoner's dilemma" that encourages each member nation individually to discount its price and exceed its production quota, widespread cheating within OPEC often erodes its ability to influence global oil prices through
collective action Collective action refers to action taken together by a group of people whose goal is to enhance their condition and achieve a common objective. It is a term that has formulations and theories in many areas of the social sciences including psych ...
. Political scientist Jeff Colgan has challenged that OPEC is a cartel, pointing to endemic cheating in the organization: "A cartel needs to set tough goals and meet them; OPEC sets easy goals and fails to meet even those." OPEC has not been involved in any disputes related to the competition rules of the World Trade Organization, even though the objectives, actions, and principles of the two organizations diverge considerably. A key US District Court decision held that OPEC consultations are protected as "governmental" acts of state by the
Foreign Sovereign Immunities Act The Foreign Sovereign Immunities Act of 1976 (FSIA) is a United States law, codified at Title 28, §§ 1330, 1332, 1391(f), 1441(d), and 1602–1611 of the United States Code, that established criteria as to whether a foreign sovereign nation ( ...
, and are therefore beyond the legal reach of US
competition law Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust ...
governing "commercial" acts. Despite popular sentiment against OPEC, legislative proposals to limit the organization's sovereign immunity, such as the
NOPEC The No Oil Producing and Exporting Cartels Act (NOPEC) was a U.S. Congressional bill, never enacted, known as (in 2007) and then as part of (in 2008). NOPEC was designed to remove the state immunity shield and to allow the international oil cart ...
Act, have so far been unsuccessful.


Conflicts

OPEC 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 " natural resource curse". A further complication is that religion-linked 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 The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab world, Arab state ...
(1973), a hostage siege directed by Palestinian militants (1975), the Iranian Revolution (1979), Iran–Iraq War (1980–1988),
Iraqi occupation of Kuwait The Iraqi invasion of Kuwait was an operation conducted by Iraq on 2 August 1990, whereby it invaded the neighboring State of Kuwait, consequently resulting in a seven-month-long Iraqi military occupation of the country. The invasion and Ira ...
(1990–1991), September 11 attacks (2001), American occupation of Iraq (2003–2011),
Conflict in the Niger Delta The current conflict in the Niger Delta first arose in the early 1990s over tensions between foreign oil corporations and a number of the Niger Delta's minority ethnic groups who feel they are being exploited, particularly the Ogoni and the Ija ...
(2004–present),
Arab Spring The Arab Spring ( ar, الربيع العربي) was a series of anti-government protests, uprisings and armed rebellions that spread across much of the Arab world in the early 2010s. It began in Tunisia in response to corruption and econom ...
(2010–2012), Libyan Crisis (2011–present), and international
Embargo against Iran There have been a number of sanctions against Iran imposed by a number of countries, especially the United States, and international entities. Iran was the most sanctioned country in the world until it was surpassed by Russia following its inv ...
(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.


History and impact


Post-WWII situation

In 1949, Venezuela and Iran took the earliest steps in the direction of OPEC, by inviting Iraq, Kuwait and Saudi Arabia to improve communication among petroleum-exporting nations as the world recovered from World War II. At the time, some of the world's largest 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 The Railroad Commission of Texas (RRC; also sometimes called the Texas Railroad Commission, TRC) is the state agency that regulates the oil and gas industry, gas utilities, pipeline safety, safety in the liquefied petroleum gas industry, and surf ...
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 " Seven Sisters", five of which were headquartered in the US following the breakup of
John D. Rockefeller John Davison Rockefeller Sr. (July 8, 1839 – May 23, 1937) was an American business magnate and philanthropist. He has been widely considered the wealthiest American of all time and the richest person in modern history. Rockefeller was ...
'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 countries

In 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 The Arab League ( ar, الجامعة العربية, ' ), formally the League of Arab States ( ar, جامعة الدول العربية, '), is a regional organization in the Arab world, which is located in Northern Africa, Western Africa, E ...
's first
Arab Petroleum Congress The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multi-governmental organization headquartered in Kuwait which coordinates energy policies among oil-producing Arab nations. OAPEC's primary objective is safeguarding the cooperati ...
convened in Cairo, Egypt, where the influential journalist Wanda Jablonski introduced Saudi Arabia's
Abdullah Tariki Abdullah Tariki (19 March 1919–7 September 1997) (Arabic: عبدالله الطريقي), also known as Red Sheikh, was a Saudi politician and government official. He was the first Saudi oil minister appointed by King Saud, and co-founder of Or ...
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 landlord In economics, an absentee landlord is a person who owns and rents out a profit-earning property, but does not live within the property's local economic region. The term "absentee ownership" was popularised by economist Thorstein Veblen's 1923 boo ...
ism" 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 expansion

The 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 Abd al-Karim Qasim Muhammad Bakr al-Fadhli al-Zubaidi ( ar, عبد الكريم قاسم ' ) (21 November 1914 – 9 February 1963) was an Iraqi Army brigadier and nationalist who came to power when the Iraqi monarchy was overthrown du ...
, whose country had skipped the 1959 congress. Government representatives from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in
Baghdad Baghdad (; ar, بَغْدَاد , ) is the capital of Iraq and the second-largest city in the Arab world after Cairo. It is located on the Tigris near the ruins of the ancient city of Babylon and the Sassanid Persian capital of Ctesiphon ...
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 Vienna, Austria, after Switzerland declined to extend diplomatic privileges. During the early years of OPEC, the oil-producing countries had a 50/50 profit agreement with the oil companies. OPEC bargained with the dominant oil companies (the Seven Sisters), but OPEC faced coordination problems among its members. If one OPEC member demanded too much from the oil companies, then the oil companies could slow down production in that country and ramp up production elsewhere. The 50/50 agreements were still in place until 1970 when Libya negotiated a 58/42 agreement with the oil company Occidental, which prompted other OPEC members to request better agreements with oil companies. 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 Marius Vassiliou (born 1957) is an American computational scientist, geophysicist, and aerospace executive. He is also an authority on the history of petroleum. Vassiliou is of Greek Cypriot descent and was educated at Harvard University and ...
(2009). Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press. .
During 1961–1975, the five founding nations were joined by Qatar (1961), Indonesia (1962–2008, rejoined 2014–2016), Libya (1962), United Arab Emirates (originally just the Emirate of Abu Dhabi, 1967),
Algeria ) , image_map = Algeria (centered orthographic projection).svg , map_caption = , image_map2 = , capital = Algiers , coordinates = , largest_city = capital , relig ...
(1969), Nigeria (1971), Ecuador (1973–1992, 2007–2020), and Gabon (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 Mohammed Sanusi Barkindo (20 April 1959 – 5 July 2022) was a Nigerian politician. From 1 August 2016 until his death, he was the Secretary General of the Organization of the Petroleum Exporting Countries. He helped to create the OPEC+ alli ...
, OPEC's acting secretary general in 2006, urged his African neighbors Angola and Sudan to join, and
Angola , national_anthem = " Angola Avante"() , image_map = , map_caption = , capital = Luanda , religion = , religion_year = 2020 , religion_ref = , coordina ...
did in 2007, followed by
Equatorial Guinea Equatorial Guinea ( es, Guinea Ecuatorial; french: Guinée équatoriale; pt, Guiné Equatorial), officially the Republic of Equatorial Guinea ( es, link=no, República de Guinea Ecuatorial, french: link=no, République de Guinée équatoria ...
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.


1973–1974: oil embargo

The oil market was tight in the early 1970s, which reduced the risks for OPEC members in nationalizing their oil production. One of the major fears for OPEC members was that nationalization would cause a steep decline in the price of oil. This prompted a wave of nationalizations in countries such as Libya, Algeria, Iraq, Nigeria, Saudi Arabia and Venezuela. With greater control over oil production decisions and amid high oil prices, OPEC members unilaterally raised oil prices in 1973, prompting the 1973 oil crisis. In October 1973, the
Organization of Arab Petroleum Exporting Countries The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multi-governmental organization headquartered in Kuwait which coordinates energy policies among oil-producing Arab nations. OAPEC's primary objective is safeguarding the cooperati ...
(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 The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973 between Israel and a coalition of Arab world, Arab state ...
. A 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 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 global economic recession, with unemployment and inflation surging simultaneously, steep declines in stock and bond prices, major shifts in trade balances and petrodollar flows, and a dramatic end to the 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 The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing carb ...
in response, as well as national emergency stockpiles designed to withstand months of future supply disruptions. Oil conservation efforts included lower speed limits on highways, smaller and more energy-efficient cars and appliances, year-round daylight saving time, reduced usage of heating and air-conditioning, better
building insulation Building insulation is any object in a building used as insulation for thermal management. While the majority of insulation in buildings is for thermal purposes, the term also applies to acoustic insulation, fire insulation, and impact insul ...
, increased support of
mass transit Public transport (also known as public transportation, public transit, mass transit, or simply transit) is a system of transport for passengers by group travel systems available for use by the general public unlike private transport, typica ...
, and greater emphasis on
coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed when dead ...
,
natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbon di ...
, ethanol,
nuclear Nuclear may refer to: Physics Relating to the nucleus of the atom: *Nuclear engineering *Nuclear physics *Nuclear power *Nuclear reactor *Nuclear weapon *Nuclear medicine *Radiation therapy *Nuclear warfare Mathematics *Nuclear space *Nuclear ...
and other
alternative energy Renewable energy is energy that is collected from renewable resources that are naturally replenished on a human timescale. It includes sources such as sunlight, wind, the movement of water, and geothermal heat. Although most renewable energy ...
sources. These long-term efforts became effective enough that US oil consumption rose 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. The embargo also meant that a section of the Non-Aligned Movement saw power as a source of hope for their
developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agree ...
. The Algerian president Houari Boumédiène expressed this hope in a speech at the UN's sixth Special Session, in April 1974:


1975–1980: Special Fund, now the OPEC Fund for International Development

OPEC's
international aid In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another. A ...
activities date from well before the 1973–1974 oil price surge. For example, the
Kuwait Fund for Arab Economic Development The Kuwait Fund for Arab Economic Development (KFAED), commonly known as the Kuwait Fund, is the State of Kuwait’s agency for the provision and administration of financial and technical assistance to developing countries. History and profile F ...
has operated since 1961. In the years after 1973, as an example of so-called "
checkbook diplomacy Checkbook diplomacy, or chequebook diplomacy, is used to describe a foreign policy which openly uses economic aid and investment between countries to curry diplomatic favor. People's Republic of China / Republic of China In East Asia, the term has ...
", 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 Algiers ( ; ar, الجزائر, al-Jazāʾir; ber, Dzayer, script=Latn; french: Alger, ) is the capital and largest city of Algeria. The city's population at the 2008 Census was 2,988,145Census 14 April 2008: Office National des Statistiques d ...
, 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...
he OPEC Special Fund's He or HE may refer to: Language * He (pronoun), an English pronoun * He (kana), the romanization of the Japanese kana へ * He (letter), the fifth letter of many Semitic alphabets * He (Cyrillic), a letter of the Cyrillic script called ''He'' in ...
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, with Permanent Observer status at the United Nations. In 2020, the institution ceased using the abbreviation OFID.


1975: hostage siege

On 21 December 1975, Saudi Arabia's
Ahmed Zaki Yamani Ahmed Zaki Yamani ( ar, أحمد زكي يماني; 30 June 1930 – 23 February 2021) was a Saudi Arabian politician who served as Minister of Petroleum and Mineral Resources from 1962 to 1986, and a minister in the Organization of the Petrole ...
, Iran's
Jamshid Amuzegar Jamshid Amouzegar ( fa, جمشید آموزگار‎; 25 June 1923 – 27 September 2016) was an Iranian economist and politician who was prime minister of Iran from 7 August 1977 to 27 August 1978 when he resigned. Prior to that, he served as ...
, and the other OPEC oil ministers were taken hostage at their semi-annual conference in
Vienna, Austria en, Viennese , iso_code = AT-9 , registration_plate = W , postal_code_type = Postal code , postal_code = , timezone = CET , utc_offset = +1 , timezone_DST ...
. The attack, which killed three non-ministers, was orchestrated by a six-person team led by Venezuelan terrorist "
Carlos the Jackal Ilich Ramírez Sánchez (; born 12 October 1949), also known as Carlos the Jackal ( es, link=no, Carlos el Chacal) or simply Carlos, is a Venezuelan convicted of terrorist crimes, and currently serving a life sentence in France for the 1975 murder ...
", and which included Gabriele Kröcher-Tiedemann and
Hans-Joachim Klein Hans-Joachim Klein (; 21 December 1947 – 9 November 2022) was a German left-wing militant and a member of the Revolutionary Cells group. His ''nom de guerre'' was "Angie". In 1975, Klein participated in an attack on OPEC headquarters in Vien ...
. The self-named "Arm of the Arab Revolution" group declared its goal to be the liberation of
Palestine __NOTOC__ Palestine may refer to: * State of Palestine, a state in Western Asia * Palestine (region), a geographic region in Western Asia * Palestinian territories, territories occupied by Israel since 1967, namely the West Bank (including East J ...
. 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 Algiers ( ; ar, الجزائر, al-Jazāʾir; ber, Dzayer, script=Latn; french: Alger, ) is the capital and largest city of Algeria. The city's population at the 2008 Census was 2,988,145Census 14 April 2008: Office National des Statistiques d ...
and Tripoli, planning to fly eventually to
Baghdad Baghdad (; ar, بَغْدَاد , ) is the capital of Iraq and the second-largest city in the Arab world after Cairo. It is located on the Tigris near the ruins of the ancient city of Babylon and the Sassanid Persian capital of Ctesiphon ...
, where Yamani and Amuzegar were to be killed. All 30 non-Arab hostages were released in Algiers, excluding Amuzegar. Additional hostages were released at another stop in Tripoli before returning to Algiers. With only 10 hostages remaining, Carlos held a phone conversation with Algerian president Houari Boumédiène, who informed Carlos that the oil ministers' deaths would result in an attack on the plane. Boumédienne must also have offered Carlos asylum at this time and possibly financial compensation for failing to complete his assignment. Carlos expressed his regret at not being able to murder Yamani and Amuzegar, then he and his comrades left the plane. All the hostages and terrorists walked away from the situation, two days after it began. Some time after the attack, Carlos's accomplices revealed that the operation was commanded by
Wadie Haddad Wadie Haddad ( ar, وديع حداد; 1927 – 28 March 1978), also known as Abu Hani, was a Palestinian leader of the Popular Front for the Liberation of Palestine's armed wing. He was responsible for organizing several civilian airplane h ...
, 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 Gaddafi of Libya, itself an OPEC member. Fellow militants
Bassam Abu Sharif Bassam Abu Sharif ( ar, بسام أبو شريف; born 1946 in Jerusalem) is a former senior adviser to Yasser Arafat and leading cadre of the Palestine Liberation Organization (PLO). He was previously a member of the Popular Front for the Libera ...
and Klein claimed that Carlos received and kept a ransom between 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 glut

In 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 quota A production quota is a goal for the production of a good. It is typically set by a government or an organization, and can be applied to an individual worker, firm, industry or country. Quotas can be set high to encourage production, or can be use ...
s 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-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 disruptions

Leading 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 Al Qaeda attacks on the US and the March 2003
US invasion of Iraq The 2003 invasion of Iraq was a United States-led invasion of the Republic of Iraq and the first stage of the Iraq War. The invasion phase began on 19 March 2003 (air) and 20 March 2003 (ground) and lasted just over one month, including 26 ...
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 The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1 ...
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 The International Energy Agency (IEA) is a Paris-based autonomous intergovernmental organisation, established in 1974, that provides policy recommendations, analysis and data on the entire global energy sector, with a recent focus on curbing carb ...
(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: volatility

Widespread insurgency and sabotage occurred during the 2003–2008 height of the American occupation of Iraq, coinciding with rapidly increasing oil demand from China and
commodity In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a co ...
-hungry investors, recurring violence against the Nigerian oil industry, and dwindling spare capacity as a cushion against 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 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 Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russia ...
activity) before plunging again. By the time of the
2011 Libyan Civil War The First Libyan Civil War was an armed conflict in 2011 in the North African country of Libya that was fought between forces loyal to Colonel Muammar Gaddafi and rebel groups that were seeking to oust his government. It erupted with the Libya ...
and
Arab Spring The Arab Spring ( ar, الربيع العربي) was a series of anti-government protests, uprisings and armed rebellions that spread across much of the Arab world in the early 2010s. It began in Tunisia in response to corruption and econom ...
, 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 dispute

The 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 glut

During 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 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 energy independence), a record volume of worldwide oil 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 Ali bin Ibrahim Al-Naimi ( ar, علي بن إبراهيم النعيمي) (born 2 August 1935) is a Saudi Arabian politician who was the Saudi Arabian Minister of Petroleum and Mineral Resources from 1995 to 2016. Early life and education Naimi w ...
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 oughly US$60/bbldo 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 war-torn Libya pumping 1 million barrels below capacity, oil producers were making major adjustments to withstand prices as low as $40, Indonesia was rejoining the export organization, Iraqi production had surged after years of disorder, Iranian output was poised to rebound with the lifting of international sanctions, hundreds of world leaders at the
Paris Climate Agreement The Paris Agreement (french: Accord de Paris), often referred to as the Paris Accords or the Paris Climate Accords, is an international treaty on climate change. Adopted in 2015, the agreement covers climate change mitigation, adaptation, and ...
were committing to limit carbon emissions from fossil fuels, and 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 In economics, diminishing returns are the decrease in marginal (incremental) output of a production process as the amount of a single factor of production is incrementally increased, holding all other factors of production equal (ceteris pari ...
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, 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 1.8 mbpd until the end of 2018. Qatar announced it would withdraw from OPEC effective 1 January 2019. According to the '' New York Times'', this was a strategic response to the
Qatar diplomatic crisis The Qatar diplomatic crisis was a diplomatic incident in the Middle East that began on 5 June 2017 when Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic relations with Qatar and banned Qatar-registered planes and ships ...
which Qatar was involved with Saudi Arabia, United Arab Emirates,
Bahrain Bahrain ( ; ; ar, البحرين, al-Bahrayn, locally ), officially the Kingdom of Bahrain, ' is an island country in Western Asia. It is situated on the Persian Gulf, and comprises a small archipelago made up of 50 natural islands and an a ...
, and Egypt. On 29 June 2019, Russia again agreed with Saudi Arabia to extend by six to nine months the original production cuts of 2018. In October 2019, Ecuador announced it would withdraw from OPEC on 1 January 2020 due to financial problems facing the country. In December 2019, OPEC and Russia agreed one of the deepest output cuts so far to prevent oversupply in a deal that will last for the first three months of 2020.


2020: Saudi-Russian price war

In 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 Shale oil is an unconventional oil produced from oil shale rock fragments by pyrolysis, hydrogenation, or thermal dissolution. These processes convert the organic matter within the rock (kerogen) into synthetic oil and gas. The resulting oil c ...
production increased, rejected the demand, ending the three-year partnership between OPEC and major non-OPEC providers. Another factor was 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 widespread turmoil in financial markets. Several pundits saw this as a Saudi-Russian price war, or
game of chicken The game of chicken, also known as the hawk–dove game or snowdrift game, is a model of conflict for two players in game theory. The principle of the game is that while the ideal outcome is for one player to yield (to avoid the worst outcome if ...
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 In economics, the debt-to-GDP ratio is the ratio between a country's government debt (measured in units of currency) and its gross domestic product (GDP) (measured in units of currency per year). While it is a "ratio", it is technically measured ...
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 The No Oil Producing and Exporting Cartels Act (NOPEC) was a U.S. Congressional bill, never enacted, known as (in 2007) and then as part of (in 2008). NOPEC was designed to remove the state immunity shield and to allow the international oil cart ...
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 fallen to record lows.


2021: Saudi-Emirati dispute

In July 2021, OPEC+ member United Arab Emirates rejected a Saudi proposed eight-month extension to oil output curbs which was in place due to COVID-19 and lower oil consumption. The previous year, OPEC+ cut the equivalent of about 10% of demand at the time. The UAE asked for the maximum amount of oil the group would recognize the country of producing to be raised to 3.8 million barrels a day compared to its previous 3.2 million barrels. A compromise deal allowed UAE to increase its maximum oil output to 3.65 million barrels a day. Per the terms of the agreement, Russia would increase its production from 11 million barrels to 11.5 million by May 2022 as well. All members would increase output by 400,000 barrels per day each month starting in August to gradually offset the previous cuts made due to the COVID pandemic.


2021–present global energy crisis

The record-high energy prices were driven by a global surge in demand as the world quit the economic recession caused by COVID-19, particularly due to strong energy demand in Asia. In August 2021, U.S. President Joe Biden's national security adviser Jake Sullivan released a statement calling on OPEC+ to boost
oil production Petroleum is a fossil fuel that can be drawn from beneath the earth's surface. Reservoirs of petroleum was formed through the mixture of plants, algae, and sediments in shallow seas under high pressure. Petroleum is mostly recovered from oil dri ...
to "offset previous production cuts that OPEC+ imposed during the pandemic until well into 2022." On 28 September 2021, Sullivan met in Saudi Arabia with Saudi Crown Prince
Mohammed bin Salman Mohammed bin Salman Al Saud ( ar, محمد بن سلمان آل سعود, translit=Muḥammad bin Salmān Āl Su‘ūd; born 31 August 1985), colloquially known by his initials MBS or MbS, is Crown Prince of Saudi Arabia, Crown Prince and Pri ...
to discuss the high oil prices. The price of oil was about US$80 by October 2021, the highest since 2014. President Joe Biden and U.S. Energy Secretary Jennifer Granholm blamed the OPEC+ for rising oil and gas prices. Russia's invasion of Ukraine in February 2022 has altered the global oil trade. EU leaders tried to ban the majority of Russian crude imports, but even prior to the official action imports to Northwest Europe were down. More Russian oil is now heading to nations including India and China. In October 2022, key OPEC+ ministers agreed to oil production cuts of 2 million barrels per day, the first production cut since 2020. This led to renewed interest in the passage of NOPEC.


2022: oil production cut

In October 2022, OPEC+ led by Saudi Arabia announced a large cut to its oil output target which will anger the USA and aid Russia. In response, US President Joe Biden vowed "consequences" and said the US government would "re-evaluate" the longstanding U.S. relationship with Saudi Arabia.
Robert Menendez Robert Menendez (; born January 1, 1954) is an American lawyer and politician serving as the senior United States senator from New Jersey, a seat he has held since 2006. Gale Biography In Context. A member of the Democratic Party, he was first ...
, the Democratic chairman of the U.S. Senate Foreign Relations Committee, called for a freeze on cooperation with and arms sales to Saudi Arabia, accusing the kingdom of helping Russia underwrite its war with Ukraine. Saudi Arabia's foreign ministry stated that the OPEC+ decision was "purely economic" and taken unanimously by all members of the conglomerate, pushing back on pressure to change its stance on the Russo-Ukrainian War at the UN. In response, the White House accused Saudi Arabia of pressuring other OPEC nations into agreeing with the production cut, some of which felt coerced, saying the United States had presented Riyadh with an analysis showing there was no market basis for the cut. National Security Council spokesman John Kirby said Riyadh knew the decision will "increase Russian revenues and blunt the effectiveness of sanctions" against Moscow, rejecting the Saudi claim that the move was "purely economic". According to a report in ''The Intercept'', sources and experts said that Saudi Arabia had sought even deeper cuts than Russia, saying Saudi Crown Prince
Mohammed bin Salman Mohammed bin Salman Al Saud ( ar, محمد بن سلمان آل سعود, translit=Muḥammad bin Salmān Āl Su‘ūd; born 31 August 1985), colloquially known by his initials MBS or MbS, is Crown Prince of Saudi Arabia, Crown Prince and Pri ...
wants to sway the
2022 United States elections The 2022 United States elections were held on November 8, 2022, with the exception of absentee balloting. During this U.S. midterm election, which occurred during the first term of incumbent president Joe Biden of the Democratic Party, all ...
in favour of the
GOP The Republican Party, also referred to as the GOP ("Grand Old Party"), is one of the two major contemporary political parties in the United States. The GOP was founded in 1854 by anti-slavery activists who opposed the Kansas–Nebraska Act, ...
and the
2024 United States presidential election The 2024 United States presidential election will be the 60th quadrennial presidential election, scheduled for Tuesday, November 5, 2024. It will be the first presidential election after electoral votes were redistributed during the 2020 ce ...
in favour of Donald Trump.


Membership


Current member countries

As of January 2020, OPEC has 13 member countries: five in the Middle East (
Western Asia Western Asia, West Asia, or Southwest Asia, is the westernmost subregion of the larger geographical region of Asia, as defined by some academics, UN bodies and other institutions. It is almost entirely a part of the Middle East, and includes Ana ...
), seven in
Africa Africa is the world's second-largest and second-most populous continent, after Asia in both cases. At about 30.3 million km2 (11.7 million square miles) including adjacent islands, it covers 6% of Earth's total surface area ...
, and one in South America. According to the U.S. Energy Information Administration (EIA), OPEC's combined rate of oil production (including
gas condensate Natural-gas condensate, also called natural gas liquids, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields. Some gas species within the raw natur ...
) 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.


OPEC+

A 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, known as OPEC+, includes
Azerbaijan Azerbaijan (, ; az, Azərbaycan ), officially the Republic of Azerbaijan, , also sometimes officially called the Azerbaijan Republic is a transcontinental country located at the boundary of Eastern Europe and Western Asia. It is a part of t ...
,
Bahrain Bahrain ( ; ; ar, البحرين, al-Bahrayn, locally ), officially the Kingdom of Bahrain, ' is an island country in Western Asia. It is situated on the Persian Gulf, and comprises a small archipelago made up of 50 natural islands and an a ...
, Brunei, Kazakhstan, Malaysia, Mexico,
Oman Oman ( ; ar, عُمَان ' ), officially the Sultanate of Oman ( ar, سلْطنةُ عُمان ), is an Arabian country located in southwestern Asia. It is situated on the southeastern coast of the Arabian Peninsula, and spans the mouth of t ...
, the Philippines,
Russia Russia (, , ), or the Russian Federation, is a transcontinental country spanning Eastern Europe and Northern Asia. It is the largest country in the world, with its internationally recognised territory covering , and encompassing one-eight ...
, South Sudan and Sudan.


Observers

Since the 1980s, representatives from Egypt, Mexico, Norway,
Oman Oman ( ; ar, عُمَان ' ), officially the Sultanate of Oman ( ar, سلْطنةُ عُمان ), is an Arabian country located in southwestern Asia. It is situated on the southeastern coast of the Arabian Peninsula, and spans the mouth of t ...
, Russia, and other oil-exporting nations have attended many OPEC meetings as observers. This arrangement serves as an informal mechanism for coordinating policies.


Lapsed members

For 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 quota A production quota is a goal for the production of a good. It is typically set by a government or an organization, and can be applied to an individual worker, firm, industry or country. Quotas can be set high to encourage production, or can be use ...
s 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. Ecuador then rejoined in October 2007 before leaving again in 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. Similar concerns prompted Gabon 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. Qatar left OPEC on 1 January 2019, after joining the organization in 1961, to focus on
natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbon di ...
production, of which it is the world's largest exporter in the form of liquified natural gas (LNG).


Market information

As 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 research

In April 2001, OPEC collaborated with five other international organizations ( APEC,
Eurostat Eurostat ('European Statistical Office'; DG ESTAT) is a Directorate-General of the European Commission located in the Kirchberg quarter of Luxembourg City, Luxembourg. Eurostat's main responsibilities are to provide statistical information to ...
, IEA, ,
UNSD The United Nations Statistics Division (UNSD), formerly the United Nations Statistical Office, serves under the United Nations Department of Economic and Social Affairs (DESA) as the central mechanism within the Secretariat of the United Nations t ...
) to improve the availability and reliability of oil data. They launched the Joint Oil Data Exercise, which in 2005 was joined by IEF and renamed the Joint Organisations Data Initiative (JODI), covering more than 90% of the global oil market. 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 benchmarks

A "crude oil benchmark" is a standardized 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 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). 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 West Texas Intermediate (WTI) is a grade or mix of crude oil; the term is also used to refer to the spot price, the futures price, or assessed price for that oil. In colloquial usage, WTI usually refers to the WTI Crude Oil futures contract t ...
(WTI), Dubai Crude, Oman Crude, and
Urals oil Urals oil is a reference oil brand used as a basis for pricing of the Russian export oil mixture. It is a mix of heavy sour oil of Urals and the Volga region with light oil of Western Siberia. Other reference oils are Brent, West Texas Interme ...
.


Spare capacity

The US Energy Information Administration, the statistical arm of the
US Department of Energy The United States Department of Energy (DOE) is an executive department of the U.S. federal government that oversees U.S. national energy policy and manages the research and development of nuclear power and nuclear weapons in the United States ...
, 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 Arabian Gulf neighbours pump at near-record rates."


See also

*
Energy diplomacy Energy diplomacy is a form of diplomacy, and a subfield of international relations. It is closely related to its principal, foreign policy, and to overall national security, specifically energy security. Energy diplomacy began in the first half of t ...
*
List of country groupings Groups of countries or regions are often referred to by a single term (word, phrase, or abbreviation). The origins of such terms include political alliances, intergovernmental organizations, business market areas, and mere colloquialism. A ...
*
List of intergovernmental organizations The following is a list of the major existing intergovernmental organizations (IGOs). For a more complete listing, see the '' Yearbook of International Organizations'', which includes 25,000 international non-governmental organizations (INGOs), ...
* Oligopoly * World oil market chronology from 2003 * Gasoline * Peak oil *
Peak gas Peak gas is the year in which the maximum global natural gas (fossil gas) production rate will be reached, after which the rate of production will enter its terminal decline. Although demand is peaking in the United States and Europe, it continu ...
* Arun-gas-field depleted year 2014


References


Further reading

* Ansari, Dawud. (2017) "OPEC, Saudi Arabia, and the shale revolution: Insights from equilibrium modelling and oil politics." ''Energy Policy'' 111 (2017): 166–178
online
* Claes, Dag Harald, and Giuliano Garavini eds. (2019) ''Handbook of OPEC and the Global Energy Order: Past, Present and Future Challenges'' (Routledge 2019
excerpt
* Colgan, Jeff D. (2014) "The emperor has no clothes: The limits of OPEC in the global oil market." ''International Organization'' 68.3 (2014): 599–632
online
* Colgan, Jeff D. 2021.
Partial Hegemony: Oil Politics and International Order
'. Oxford University Press. *Dudley, Bob. (2019) "BP energy outlook." ''Report–BP Energy Economics–London: UK'' 9 (2019
online
* Economou, Andreas, and Bassam Fattouh. (2021) "OPEC at 60: the world with and without OPEC." OPEC ''Energy Review'' 45.1 (2021): 3-28
online
a historical perspective from 1990 to 2018. * 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).
The Rise and Fall of OPEC in the Twentieth Century
'. Oxford University Press. * Gately, Dermot. (1984) "A ten-year retrospective: OPEC and the world oil market." ''Journal of Economic Literature'' 22.3 (1984): 1100–1114. summary of scholarly literatur
online
* * Monbiot, George. "Shell is not a green saviour. It’sa planetary death machine." ''The Guardian'' 26 (2019). Monbiot, George. "Shell is not a green saviour. It’s a planetary death machine." ''The Guardian'' 26 (2019)
online
* Painter, David S (2014)
"Oil and geopolitics: The oil crises of the 1970s and the cold war"
''Historical Social Research/Historische Sozialforschung''. 186–208. * Pickl, Matthias J. (2019) "The renewable energy strategies of oil majors–From oil to energy?." ''Energy Strategy Reviews'' 26 (2019): 100370
online
* Ratti, Ronald A., and Joaquin L. Vespignani. (2015) "OPEC and non-OPEC oil production and the global economy." ''Energy Economics'' 50 (2015): 364–378
online
* Skeet, Ian (1988). ''OPEC: Twenty-five Years of Prices and Politics''. Cambridge UP.
online
* Van de Graaf, Thijs. (2020) "Is OPEC dead? Oil exporters, the Paris agreement and the transition to a post-carbon world." in ''Beyond market assumptions: Oil price as a global institution'' (Springer, Cham, 2020) pp. 63–77
online
* Woolfson, Charles, and Matthias Beck. (2019) "Corporate social responsibility in the international oil industry." in ''Corporate social responsibility failures in the oil industry. '' (Routledge, 2019) pp. 1–14
online
* Yergin, Daniel (1991). ''The Prize: The Epic Quest for Oil, Money, and Power''.
online
* Yergin, Daniel (2011). ''The quest : energy, security and the remaking of the modern world'' (2011
online


External links

*
The OPEC Fund for International Development official website
{{DEFAULTSORT:Opec Cartels History of the petroleum industry Petroleum International energy organizations Petroleum economics Petroleum organizations Petroleum politics Organisations based in Vienna Organizations established in 1960 20th century in Baghdad