OPEC is an organization consisting currently of 12 Member Countries located across the continents of Asia, Africa, and America.
Member Countries 1960: Founding Members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Qatar (1961); Indonesia (1962) – suspended its membership from January 2009 Libya (1962) United Arab Emirates (1967) Algeria (1969) Nigeria (1971) Ecuador (1973) – suspended its membership from December 1992-October 2007 Angola (2007) Gabon (1975–1994).
OPEC member countries produce about 40% of the world’s oil
Goals of OPEC OPEC was formed to administer a common policy for the sale of petroleum The mission of OPEC is to: Coordinate and unify the petroleum policies of its Member Countries Ensure the stabilization of oil markets Secure an efficient, economic and regular supply of petroleum to consumers, Ensure a steady income to producers Provide a fair return on capital for those investing in the petroleum industry
1960 - Baghdad Conference 1965 – headquarters move to Vienna 1968 - Declaratory Statement of Petroleum Policy in Member Countries’ 1973 – Arab Oil embargo 1976 – OFID 1980-ies – oil glut 1986 – oil glut peak 1990-91 Gulf War History
OPEC today Increased production has led to an over supply of crude oil in the world market, also boosted by increased production from non-OPEC countries (Russia, Canada, and the U.S.) Political tensions caused by western sanctions against iran Markets also remain shaken by worries about the eurozone and EU debt crisis Chinese growth is less than predicted (8.2%<8.5%) Long-seated problems: civil strife in nigeria, civil war in Libya, corruption in Angola Weak economic performance in developed nations
Conclusion 1.OPEC can provide the market with the oil it needs and it is doing that quite efficiently. But there is little it can do in terms of price control which are driven high by speculators.
Conclusion 2. Political disputes among the members of OPEC, inner problems of many members (civil wars, etc.) instability
Conclusion Advantages Economic: Oil supply and price (to lesser extent) control Enables economic growth Ensures market stability Disadvantages Political: Inner disagreements Interdependance with Asia (i.g. China) and Western countries (US, EU)