ORGANIZATION OF THE PETROLEUM EXPORTING COUNTRIES (OPEC)

NEWS: UAE’s Exit from OPEC and OPEC+

Introduction

• Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization established in 1960.
• It was created to coordinate petroleum policies among oilproducing countries.
• Its main aim is to ensure stability in global oil markets.

Objectives of OPEC

• Objectiveà stabilize global oil prices.
• Ensures fair returns for oil-producing countries.
• It provides a steady and reliable supply of oil to consumers.
• It also promotes efficient and regular petroleum supply worldwide.

Foundation and Headquarters

• OPECà founded in Baghdad (Iraq) in 1960.
• The five founding members were: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela
• Headquarters of OPECà Vienna, Austria (since 1965).

Membership of OPEC

• OPEC mainly includes à oil-producing countries from the Middle East, Africa, and South America.
• Currently has 12 member countries: Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, UAE, Venezuela.

Recent Membership Changes

• Congo joined in 2018, Equatorial Guinea in 2017, and Gabon rejoined in 2016.
• Angola withdrew in 2024, reducing total members.
• Qatar (2019), Indonesia (2016), Ecuador (2020) left or suspended membership.

Oil Reserves and Production Share

• OPEC countries hold around 75–80% of the world’s proven crude oil reserves.
• They contribute about 35–40% of global crude oil production.
• This gives OPEC significant control over global energy markets.

Functioning of OPEC

Production Control Mechanism

• OPEC influences oil prices by adjusting production levels.
• Member countries meet regularly to decide production quotas.
• Decisions are based on global demand and supply conditions.

Role of Saudi Arabia

• Saudi Arabia is the most influential member due to its large production capacity.
• Plays a key role in maintaining price stability.

Importance of OPEC

• OPEC plays a crucial role in global energy security.
• Helps in avoiding extreme price fluctuations in oil markets.
• Ensures coordination among major oil producers.
• Impacts inflation, trade, and economic growth globally