The Organization of the Petroleum Exporting Countries, also known as “OPEC“, is an intergovernmental organization of 13 oil-exporting countries that coordinates their petroleum policies. Members.
Its mission also includes ensuring the stability of the oil market to ensure a regular and efficient supply of oil to consumers, income for producers and fair capital returns for industry investors.
Founded in 1960 by Saudi Arabia, Venezuela, Iraq, Iran and Kuwait.
They are OPEC OG. 😂
Other countries that have since joined OPEC include Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon, Angola, Equatorial Guinea and the Republic of Congo.
OPEC currently has 13 members: 5 in the Middle East, 7 in Africa, and 1 in South America.
OPEC’s goals are to “coordinate and harmonize petroleum policies among member countries to ensure fair and stable prices for petroleum producers; to provide efficient, economical and regular supplies of petroleum to consuming countries; and to investors in the industry Deliver a fair return on capital.”
To many critics, OPEC is a cartel because it regulates oil supply to control prices. OPEC sets oil production quotas for its members by meeting every two years.
We like to call them “Black Crack Mafia”.
In the past, OPEC’s dominance of oil production meant the organization was considered very powerful.
According to data from the U.S. Energy Information Administration (EIA), OPEC oil production (including condensate) accounted for 44% of total global production in 2016, of which OPEC accounted for 81.5% of the world’s “proven production” “Oil reserves.
However, the rise of the U.S. fracking industry has raised questions about whether OPEC’s control over oil prices is waning.
What does OPEC do?
Broadly speaking, OPEC has three main goals.
1. Keep oil prices stable
The first is to coordinate oil production among member countries through quotas and maintain oil price stability.
The theory is that by controlling supply, OPEC will be able to have a greater influence on the price of oil on world markets.
2. Reduce oil price fluctuations
OPEC’s second goal is to reduce oil price volatility, hoping to make oil production and supply as profitable as possible for OPEC members.
It also helps avoid competition from the growing U.S. fracking industry as well as non-OPEC and non-OPEC affiliated countries.
3. Minimize surpluses and shortages
OPEC’s third goal is to adjust oil supply to cope with surpluses and shortages, thereby helping to reduce the volatility of oil prices in the international market.
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