Organization of the Petroleum Exporting Countries

Why in news?

• India, the world’s third-largest energy consumer, on 21^st October warned that high oil prices will undermine global economic recovery, and nudged OPEC nations to work towards affordable and reliable supplies.

About Organization of the Petroleum Exporting Countries (OPEC)

• OPEC is an intergovernmental organization or cartel of 13 countries.
• Founded in 1960 in Baghdad 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.

Significance:

• As of September 2018, the 13 member countries accounted for an estimated 44 percent of global oil production and 81.5 percent of the world's "proven" oil reserves, giving OPEC a major influence on global oil prices.
• The organization is also a significant provider of information about the international oil market.

Mission of OPEC:

• To coordinate and unify the petroleum policies of its member countries and ensure the stabilization 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.

Members:

• Former OPEC members are Ecuador, Indonesia and Qatar.
• In addition to formal OPEC members, 10 additional oil exporting countries, led by Russia, form the OPEC+ cartel, which since 2016 cooperate in fixing the global crude oil prices by agreeing to production quotas that keep global production below demand/consumption

Add ons:

• 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.

PRACTICE QUESTION:

Which of the following country is not a member of OPEC?

(a) Iran

(b) Iraq

(c) Syria

(d) Libya

Answer