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.[122]. During formation, Middle Eastern countries sought to establish the headquarters in Beirut or Baghdad, but Venezuela argued for a neutral location. [88] As he explained in an interview:[89]. Indonesia announced another "temporary suspension" of its OPEC membership rather than accepting the organization's requested 5-percent production-cut. 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 the 1980s, OPEC began setting production targets for its member nations; generally, when the targets are reduced, oil prices increase. About OPEC• It is a permanent intergovernmental organization, currently consisting of 12 oil producing and exporting countries, spread across three continents America, Asia and Africa• Oil is the main marketable commodity and foreign exchange … But let's be clear, "OPEC Plus" is really all about one country - Russia. 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. The Secretariat was established in 1961; it was based in Geneva, Switzerland but moved to Vienna, Austria alongside the headquarters. Qatar joined OPEC in 1961 but terminated its membership in January 2019 after a strained relationship with Saudi Arabia and the United Arab Emirates. 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. [20] 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,[21] and Angola did in 2007, followed by Equatorial Guinea in 2017. What are the current member countries of OPEC Plus group ? A larger group called OPEC+ was formed in late 2016 to have more control on the global crude oil market. One of the first meetings of OPEC. For a time, the UK imposed an emergency three-day workweek. [12], 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. The current OPEC members are the following:[ref] Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia (the de facto leader), the United Arab Emirates and Venezuela. GECF joined as an eighth partner in 2014, enabling JODI also to cover nearly 90% of the global market for natural gas. [76], 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. [90], At various times, OPEC members have displayed apparent anti-competitive cartel behavior through the organization's agreements about oil production and price levels. The talks will include additional members from a wider group, known as OPEC Plus, that also includes Russia. [84], During 2014–2015, OPEC members consistently exceeded their production ceiling, and China experienced a slowdown in economic growth. [77] It rejoined the organization in January 2016,[2] but announced another "temporary suspension" of its membership at year-end when OPEC requested a 5% production cut. posted on 13.03.2020 at 14:16: 0: Report: Gale: OPEC+ consists of 13 OPEC members: Algeria; Angola; Equatorial Guinea; Gabon; Iran ; Iraq; Kuwait; Libya; … The Secretariat is made up of the Secretary-General who is also the Chief Executive Officer, the Legal 0ffice, Research Division, and the support staff required for daily operations. Economists often cite OPEC as a textbook example of a cartel that cooperates to reduce market competition, but one whose consultations are protected by the doctrine of state immunity under international law. The OPEC Seminar is a premier event on the world energy calendar. Over the years, the Seminar has attracted more participants and has embraced new concerns such as global finance and economics, sustainable development, and the environment. [79] 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. All maps, graphics, flags, photos and original descriptions © 2021 worldatlas.com, Organization of Petroleum Exporting Countries, The World’s Largest Oil Reserves By Country. AnswerTabs: Ask question: Business; Economies; What are the member countries of OPEC Plus ? In part, OPEC was established in response to the market dominance of the ‘Seven Sisters’, a term used to describe the major multinational oil companies at the time. [11] The president of Petrobras, Roberto Castello Branco, in an interview in New York, said that being a member of OPEC is not an option currently considered by the Brazilian federal government. [22], 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. On Friday, it will be followed by a second meeting on the same topic, which was also called by Saudi Arabia. OPEC members strongly prefer to describe their organization as a modest force for market stabilization, rather than a powerful anti-competitive cartel. ", "Report to Congress: United States Gulf Environmental Technical Assistance", "Europe Brent Crude Oil Spot Price FOB (DOE)", "Iraq Threatens Emirates and Kuwait on Oil Glut", U.S. Senate Committee on Homeland Security and Governmental Affairs, "Opening address to the 159th Meeting of the OPEC Conference", "Saudi oil policy: stability with strength", "Saudi Arabia's Plan to Extend the Age of Oil", "Saudis Vow to Ignore OPEC Decision to Cut Production", "OPEC Won't Cut Production to Stop Oil's Slump", "Inside OPEC room, Naimi declares price war on US shale oil", "Interview With Saudi Oil Minister Ali Naimi", "OPEC discord fuels further oil price drop", "Despite Climate Concerns, OPEC Plans to Keep Pumping Oil While It Can", "Iran Says Post-Sanctions Crude Output Boost Won't Hurt Prices", "OPEC is very much alive as Saudis learn to tread softly", "OPEC Has Its Way as China Oil Output Cut by Most in 15 Years", "Net oil importer Indonesia leaves producer club OPEC, again", "OPEC Agrees to Cut Production in Drive to End Record Glut", "The World's Biggest Oil Kingdom Reverses Course", "Russian Energy Minister Says Oil Cuts to Start in January", "OPEC Said to Break Bread With Shale in Rare Show of Detente", "Where OPEC+ Oil Production Stands Now – Bloomberg", "Russia backs gradual, managed exit from oil cuts with OPEC", "OPEC to extend production cuts throughout 2018", "Qatar to withdraw from OPEC in January 2019", "Russia agrees with Saudi Arabia to extend OPEC+ oil output deal", "Ecuador to leave OPEC in 2020 due to fiscal problems – ministry", "OPEC, allies agree to deepen oil output cuts", "How a Saudi-Russian Standoff Sent Oil Markets Into a Frenzy", "Oil price war threatens widespread collateral damage", "Who will win the Saudi-Russia game of chicken in the new oil war? With only 10 hostages remaining, Carlos held a phone conversation with Algerian President Houari Boumédienne, who informed Carlos that the oil ministers' deaths would result in an attack on the plane. The Secretariat implements the resolution passed by the Conference and the decisions agreed upon by the Board of Governors. [13] At the time, some of the world's largest oil fields were just entering production in the Middle East. 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. Ordinary meetings are held twice a year, at the organisation’s headquarters in Vienna. The next meeting of OPEC … Is it reasonable for a highly efficient producer to reduce output, while the producer of poor efficiency continues to produce? [115] Another factor was weakening global demand resulting from the COVID-19 pandemic. Its OPEC membership originated with the. 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 liquified natural gas (LNG). OPEC seeks to unify and coordinate petroleum policies of member states and stabilize the oil market to secure an efficient and regular supply of oil to consumers and a steady income to producers. 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. In an attempt to cut production and raise oil prices, OPEC came together and agreed on a production cut where each member country would cut production by a small amount, a couple percent in most cases. "[78], The differing economic needs of OPEC member states often affect the internal debates behind OPEC production quotas. OPEC’s headquarters, first located in Geneva, was moved to Vienna in 1965. In light of all these market pressures, OPEC decided to set aside its ineffective production ceiling until the next ministerial conference in June 2016. Excluding condensate oil production of nearly 20 million bbl/day, national sovereignty over natural resources, Organization of Arab Petroleum Exporting Countries, unemployment and inflation surging simultaneously, Kuwait Fund for Arab Economic Development, Popular Front for the Liberation of Palestine, violence against the Nigerian oil industry, worst global recession since World War II, hostage siege directed by Palestinian militants, "Glossary of Industrial Organization Economics and Competition Law", "Oil falls ahead of OPEC+ Meeting to set new output levels", "Demand For OPEC Oil Falls To 30-Year Low", "Top 100 Most Influential People in the Shipping Industry: 3. "[62], 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 3.5 million barrels per day (560,000 m3/d) and that this number would increase to a peak in 2017 of 4.6 million barrels per day (730,000 m3/d). That is crooked logic. This was moved to Vienna, Austria, on September 1, 1965. 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. The five founding members attended the first OPEC conference in September 1960. As of January 2020, OPEC has 13 member countries: five in the Middle East (Western Asia), seven in Africa, and one in South America. [31][32], 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 emergency stockpiles designed to withstand months of future supply disruptions. 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.[25][33][34][35][36]. OPEC ensures that countries have national sovereignty over natural resources and has played a prominent role in setting global oil prices and fostering international relations. OPEC… Tony Smith, Configurations of Power in North-South Relations since 1945. Evidence from Cointegration and Causality Tests", "The Prisoner's Dilemma and Cheating by Cartel Members", "Is OPEC dead? 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. [166] By November 2015, the IEA changed its assessment[quantify] "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. It is located in the organization's headquarters in Vienna. [72][73][74] 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. [13][14][15][16], 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, whose country had skipped the 1959 congress. [162][163], The OPEC Reference Basket of Crudes has been an important benchmark for oil prices since 2000. [10] However, the influence of OPEC on international trade is periodically challenged by the expansion of non-OPEC energy sources, and by the recurring temptation for individual OPEC countries to exceed production targets and pursue conflicting self-interests. OPEC also embarked on a new era of cooperation in 2016, when its Member Countries joined 10 other oil producers and signed the unprecedented and historic ‘Declaration of Cooperation’ to support stability in the global oil market. The self-named "Arm of the Arab Revolution" group declared its goal to be the liberation of Palestine. [84], 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. December 4, 2020. Journalists and police officers stand outside the Organisation of the Petroleum Exporting Countries (OPEC) headquarters in Vienna, Austria December 5, … The policy has not changed. [62], 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. "[41] The Fund became an official international development agency in May 1980 and was renamed the OPEC Fund for International Development (OFID),[42] with Permanent Observer status at the United Nations. International commodity agreements covering products such as coffee, sugar, tin and more recently oil (OPEC: Organization of Petroleum Exporting Countries) are examples of international cartels which have publicly entailed agreements between different national governments. [116] 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. OPEC accounts for 44% of the oil produced and over 81% of the world's oil reserves, giving the organization a significant influence on the global prices that were initially determined by the "Seven Sisters" multinational companies. [65] 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. Letting Iraq's oil minister attend an OPEC meeting may violate the Sherman Antitrust Act", "Iraq to Attend Next OPEC Ministerial Meeting", "Oil producers agree to cut production by a tenth", "Is U.S. Energy Dominance Coming To An End? [68][69], Lower demand triggered by the 1997–1998 Asian financial crisis saw the price of oil fall back to 1986 levels. The group's mission "is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry." 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's original Standard Oil monopoly. [146] Moreover, because of an economic "prisoner's dilemma" that encourages each member nation individually to discount its price and exceed its production quota,[147] widespread cheating within OPEC often erodes its ability to influence global oil prices through collective action. The OPEC Secretariat is the executive organ of the Organization of the Petroleum Exporting Countries (OPEC). "[71], 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-hungry investors, recurring violence against the Nigerian oil industry, and dwindling spare capacity as a cushion against potential shortages. What is OPEC? It is also responsible for conducting research and reporting findings that are vital inputs for decision making. The Secretariat is the executive organ of OPEC. Poorer members have pushed for production cuts from fellow members, to increase the price of oil and thus their own revenues. 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