Association of oil producing countries. Organization of Petroleum Exporting Countries (Opek): Organizational Characteristics and Operational Goals

International commodity organizations (MTOs) are involved in the implementation of international commodity agreements regulating activities in certain market segments in the form of:

International organizations;
International Councils;
International Advisory Committees;
International Research Groups (MIL).

All of these institutes are engaged in the study of the state of the world commodity markets, namely: the prevailing ratio of supply and demand for specific raw materials, the dynamics of prices and conditions.

The International Councils for Olive Oil, Tin and Grains are currently functioning.

MIG acts on rubber, lead and zinc, copper.

There is an International Cotton Advisory Committee, a Tungsten Committee.

Iran possesses the second largest oil reserve after Saudi Arabia (18 billion tons) and occupies 5.5% of the world oil products trade market. Particular attention is paid to diversifying the economy through the development of precision engineering, automotive engineering, rocket and space industry, as well as information technology.

A major exporter of oil is Kuwait... Oil production provides 50% of Kuwait's GDP, its share in the country's exports is 90%. The country also has developed oil refining and petrochemistry, production of building materials, fertilizers, food industry, and pearl mining. Desalination of sea water is carried out. Fertilizers constitute an important part of the country's exports.

Iraq possesses the second largest oil reserves in the world. The Iraqi state-owned companies North Oil Company and South Oil Company have a monopoly on the development of local oil fields. Iraq's southern fields, managed by the SOC, produce about 1.8 million barrels of oil per day, which is almost 90% of all oil produced in Iraq.

Thus, most OPEC countries are deeply dependent on the revenues of their oil industry... Perhaps the only member country of the organization that represents an exception is Indonesia, which receives substantial income from tourism, timber, gas and other raw materials. For the rest of OPEC, the level of dependence on oil exports ranges from the lowest - 48% in the case of the United Arab Emirates to 97% in Nigeria.

During the crisis, the strategic path for countries dependent on oil exports is to diversify the economy, moreover, through the development of the latest resource-saving technologies.

Details The organization

(transliteration of the English-language abbreviation OPEC - The Organization of Petroleum Exporting Countries, in literal translation - the Organization of Petroleum Exporting Countries) - an international intergovernmental organization of oil-producing countries, created to stabilize oil prices.

Organization of Petroleum Exporting Countries

Foundation date

Start date of activity

Headquarters location

Vienna, Austria

Secretary General

Mohammad sanusi barkindo

Official site

The goal of OPEC is the coordination of activities and the development of a common policy in relation to oil production among the member countries of the organization, maintaining the stability of world oil prices, ensuring uninterrupted supplies of raw materials to consumers and receiving returns from investments in the oil industry.

OPEC's impact on the oil market

According to the International Energy Agency (IEA), OPEC countries account for more than 40% of world oil production and about 60% of the total volume of oil traded on the international market.

The price of oil is dictated primarily by the balance of supply and demand. And the proposal, as you can see from the above statistics, is determined by the actions of OPEC. It is for this reason that the Organization of the Petroleum Exporting Countries plays an extremely important role in the oil industry.

Even though many experts have recently seen a decrease in the influence of OPEC on the oil market, nevertheless, oil prices are still largely dependent on the actions of the organization. History knows many examples when instability in the market was generated by simple rumors related to the actions of the organization, or a statement by one of the members of the OPEC delegation.

The main OPEC instrument for regulating oil prices is the introduction of so-called production quotas among the organization's members.

OPEC quotas

OPEC quota - set at a general meeting, the maximum volume of oil production both for the entire organization as a whole, and for each individual OPEC member country.

The reduction in the general level of the cartel's production by distributing the oil production of the OPEC countries quite logically leads to an increase in quotations for black gold. With the abolition of quotas (this happened in the history of the oil industry), oil prices dropped significantly.

The system for setting quotas or "production ceilings" was spelled out in the organization's charter, approved in 1961. However, for the first time this method was applied only at the 63rd extraordinary OPEC conference on March 19-20, 1982.

Organization of Petroleum Exporting Countries in Figures

1,242.2 billion barrels

The total proven oil reserves of the OPEC member countries

Share of reserves of member countries of the organization from all world oil reserves

39 338 thousand barrels per day

OPEC oil production

OPEC's share in world oil production

OPEC World Export Share

BP Energy Review 2018 data.

* Data from the International Energy Agency for 2018.

OPEC countries

The organization was formed during an industry conference in Baghdad on September 10-14, 1960 at the initiative of five developing oil producing countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

In the future, countries whose economies are directly dependent on oil production and export began to join the organization.

Despite the fact that OPEC includes countries from different parts of the world, historically, Saudi Arabia and other states of the Middle East have the greatest influence within the cartel.

This preponderance of influence is associated not only with the fact that some of these countries are the founders of the organization, but also with huge oil reserves concentrated in the Arabian Peninsula and Saudi Arabia in particular, a high level of production, as well as the availability of the most modern technologies for extracting this mineral in surface. For comparison, in 2018, Saudi Arabia produced an average of 10.5 million barrels per day, and the closest country in terms of production among the cartel participants - Iran - 4.5 million barrels per day.

As of the end of 2019, the organization includes 14 countries. Below is a table listing the OPEC member states in the order in which they joined the organization.

Years of membership

Oil and condensate production, million barrels

Proved reserves, billion tons

Near East

Saudi Arabia

Near East

Venezuela

South America

North Africa

United Arab Emirates

Near East

North Africa

West Africa

South America

1973 - 1992,
2007 -

Central Africa

1975 - 1995,
2016 -

South Africa

Equatorial Guinea

Central Africa

* Ecuador was not a member of the organization from December 1992 to October 2007. In 2019, the country announced that it would leave OPEC from January 1, 2020.

** Gabon suspended membership from January 1995 to July 2016.

In addition, OPEC included:

Indonesia (from 1962 to 2009, and from January 2016 to 30 November 2016);
- Qatar (from 1961 to 31 December 2018).

Approval of admission to the organization of a new member requires the consent of three quarters of the current members, including all five founders of OPEC. Some countries are waiting for agreement on the assignment of membership in the organization for several years. For example, Sudan filed a formal application in October 2015, but is still not a member of the organization at the moment (end of 2019).

Each cartel member is obliged to pay an annual membership fee, the amount of which is set at the OPEC meeting. The average contribution is $ 2 million.

As mentioned above, there have been several times in the history of the organization when countries terminated or temporarily suspended membership. This was mainly due to the disagreement of the countries with the production quotas introduced by the organization and the unwillingness to pay membership fees.

Organization structure

OPEC meetings

The supreme governing body of the Organization of the Petroleum Exporting Countries is the Conference of the Participating Countries, or, as it is more often called, a meeting or meeting of OPEC.

OPEC meets twice a year, and extraordinary sessions are organized if necessary. The place of meeting, in most cases, is the headquarters of the organization, which has been located in Vienna since 1965. A delegation from each country is present at the meeting, usually headed by the oil or energy ministers of the respective country.

President of the Conference

The meetings are chaired by the President of the Conference (OPEC President), who is elected every year. Since 1978, the post of Deputy President has also been introduced.

Each member country of the organization appoints a special representative, from whom the Board of Governors is formed. The composition of the council is approved at a meeting of OPEC, as is its chairman, who is elected for a three-year term. The functions of the council are to manage the organization, convene Conferences and prepare the annual budget.

Secretariat

The executive body of the Organization of the Petroleum Exporting Countries is the Secretariat, headed by the Secretary General. The Secretariat is responsible for the implementation of all resolutions adopted by the Conference and the Board of Governors. In addition, this body conducts research, the results of which are key factors in the decision-making process.

The OPEC Secretariat comprises the Office of the Secretary General, the Legal Bureau, the Research Division and the Support Services Division.

OPEC Informal Meetings

In addition to official meetings, informal OPEC meetings are organized. At them, the members of the organization discuss issues in a consultative - preliminary mode, and later at a formal meeting are guided by the results of such negotiations.

OPEC Observers

Since the 1980s, OPEC meetings have been attended by representatives of other oil-producing countries that are not members of the organization as observers. In particular, representatives of such countries as Egypt, Mexico, Norway, Oman, Russia attended many meetings.

This practice serves as an informal mechanism for policy coordination between non-OPEC and non-OPEC countries.

Russia has been an OPEC observer country since 1998, and since that moment has regularly participated in extraordinary sessions of the organization's ministerial conferences in this status. In 2015, Russia was invited to join the main structure of the organization, but the representatives of the Russian Federation decided to leave the observer status.

Since December 2005, a formal Russia-OPEC energy dialogue has been established, within the framework of which it is planned to organize annual meetings of the Minister of Energy of the Russian Federation and the Secretary General of the organization alternately in Moscow and Vienna, as well as to hold expert meetings on the development of the oil market.

It should be noted that Russia has a significant impact on OPEC policy. In particular, members of the organization are afraid of a possible increase in Russian production volumes, and therefore refuse to reduce production if Russia does not do the same.

OPEC + (Vienna Group)

In 2017, a number of non-OPEC oil producing countries agreed to participate in cutting oil production, thus enhancing coordination in the global market. The group included 10 countries: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.

Thus, together with the members of the organization, 24 countries support the reduction in production. This general group and the agreement itself between 24 countries are called OPEC + or in some, mainly foreign sources, the Vienna Group.

OPEC reports

The Secretariat of the Organization of the Petroleum Exporting Countries publishes several periodicals, which contain information on its activities, statistics on the main indicators of the global oil industry in general and the cartel members in particular.

The Monthly Oil Market Report (MOMR) - The Monthly Oil Market Report - analyzes the most important issues facing the global oil community. In addition to analyzing supply and demand, the report provides an assessment of the dynamics of oil prices, commodity and commodity markets, refining operations, stocks and activity in the tanker market.
- The OPEC Bulletin - The monthly OPEC Bulletin is the organization's flagship publication, containing feature articles on the Secretariat's activities and activities, as well as news from member countries.
- The World Oil Outlook (WOO) - An annual summary of the Organization of the Petroleum Exporting Countries' mid- and long-term forecasts for the global oil market. In developing the report, various scenarios and analytical models are used that combine many factors and problems that may affect the oil industry as a whole and the organization itself in the coming years.
- The Annual Statistical Bulletin (ASB) - The annual statistical bulletin - unites statistical data from all member countries of the organization and contains about 100 pages with tables, charts and graphs detailing world oil and gas reserves, oil production and production of petroleum products, export data and transportation, as well as other economic indicators.

In addition, publications such as the Annual Report, the OPEC Energy Review and the 5-year Long-Term Strategy are worth noting.

Also on the organization's website you can find “Frequently Asked Questions” and a brochure “Who gets what from oil?”.

OPEC Oil Basket

For a more efficient calculation of the cost of oil produced in the member countries of the organization, the so-called "OPEC oil basket" was introduced - a certain set of grades of oil produced in these countries. The price of this basket is calculated as the arithmetic average of the cost of the varieties included in it.

Background and history of the organization

Post-World War II period

In 1949, Venezuela and Iran made their first attempts to create an organization, inviting Iraq, Kuwait and Saudi Arabia to establish links between oil-exporting countries. At that time, production at some of the world's largest fields in the Middle East was just beginning.

After World War II, the United States was the largest producer and at the same time the largest consumer of oil. The global market was dominated by a group of seven multinational oil companies known as the Seven Sisters, five of which were based in the United States and emerged from the collapse of the Rockefeller monopoly of Standard Oil:

Exxon
Royal Dutch Shell
Texaco
Chevron
Mobil
Gulf oil
British petroleum

Thus, the desire of the oil-exporting countries to unite was dictated by the need to create a counterbalance to the economic and political influence of the transnational group "Seven Sisters".

1959 - 1960 Anger of exporting countries

In February 1959, as supply opportunities expanded, multinationals from the Seven Sisters unilaterally cut prices of Venezuelan and Middle Eastern crude by 10%.

A few weeks later, the first Arab Oil Congress of the League of Arab States was held in Cairo, Egypt. The Congress was attended by representatives of the two largest oil-producing countries after the USA and the USSR - Abdullah Takiri from Saudi Arabia and Juan Pablo Perez Alphonse from Venezuela. Both ministers expressed outrage at the fall in commodity prices and instructed their counterparts to conclude the Maadi Pact, or Gentlemen's Agreement, calling for exporting countries to create an "oil advisory commission," to which multinational companies must submit plans for changes in commodity prices.

There was a sense of hostility towards the West and protest against the Seven Sisters, who at the time controlled all oil operations in exporting countries and had enormous political influence.

In August 1960, ignoring warnings, multinational companies again announced a decline in the price of Middle East oil.

1960 - 1975 Founding of OPEC. The first years.

On September 10-14, 1960, at the initiative of Abdullah Tariqi (Saudi Arabia), Perez Alfonso (Venezuela) and Iraqi Prime Minister Abd al-Karim Qasim, the Baghdad Conference was organized. At the meeting, representatives of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met to discuss the rise in oil prices for their countries, as well as the policy of responding to the actions of transnational companies.

As a result, despite strong opposition from the United States, the aforementioned five states formed the Organization of the Petroleum Exporting Countries (OPEC), whose goal was to ensure the best price for oil, regardless of the large oil corporations.

Initially, the Middle Eastern countries called for the organization's headquarters in Baghdad or Beirut. However, Venezuela favored a neutral location, which served as the location of the headquarters in Geneva (Switzerland).

In 1965, after Switzerland refused to renew its diplomatic privileges, the OPEC headquarters was moved to Vienna (Austria).

During 1961 - 1975, the five founding countries were joined by: Qatar, Indonesia, Libya, the United Arab Emirates (initially only the Emirate of Abu Dhabi), Algeria, Nigeria, Ecuador and Gabon. By the early 1970s, OPEC countries accounted for more than half of the world's oil production.

On April 2, 1971, the Organization of Petroleum Exporting Countries signed the Tripoli Agreement with the major oil companies doing business in the Mediterranean region, which resulted in higher oil prices and increased profits for the producing countries.

1973 - 1974 Oil embargo.

In October 1973, the OAPEC (Organization of Arab Petroleum Exporting Countries, consisting of the Arab majority OPEC, as well as Egypt and Syria) announced significant production cuts and an oil embargo against the United States of America and other industrialized countries supporting Israel in the Judgment War. day.

It is worth noting that in 1967, in response to the Six Day War, an attempt was also made to embargo the United States, but the measure was ineffective. The 1973 embargo, on the other hand, led to a sharp rise in oil prices from $ 3 to $ 12 per barrel, which significantly affected the world economy. The world has experienced a global economic downturn, rising unemployment and inflation, falling stock and bond prices, shifts in the trade balance, etc. Even after the end of the embargo in March 1974, prices continued to rise.

Oil embargo 1973-1974 served as a catalyst for the founding of the International Energy Agency, and also prompted many industrialized countries to create national oil reserves.

In this way, OPEC has demonstrated its impact on the economic and political arena.

1975 - 1980 Special Fund, OFID

The Organization of the Petroleum Exporting Countries' international aid activities began long before the 1973-1974 spike in oil prices. For example, the Kuwait Fund for Arab Economic Development has been operating since 1961.

After 1973, some Arab countries became the largest providers of foreign aid, and OPEC added oil to its targets to support the socio-economic growth of poorer countries. The OPEC Special Fund was established in Algeria in March 1975 and formally established in January of the following year.

In May 1980, the Fund retrained into an official international development agency and was renamed the OPEC Fund for International Development (OFID) with permanent observer status at the United Nations.

1975 Hostage taking.

On December 21, 1975, several oil ministers, including a representative from Saudi Arabia and Iran, were taken hostage at the OPEC Conference in Vienna. The attack, which killed three ministers, was orchestrated by a six-man team led by Venezuelan militant Carlos Jackal, who declared their goal of liberating Palestine. Carlos planned to seize the conference by force and ransom all eleven oil ministers present, with the exception of Ahmed Zaki Yamani and Jamshid Amuzegar (representatives of Saudi Arabia and Iran), who were to be executed.

Carlos marked 42 of the 63 hostages on the bus and headed to Tripoli, stopping in Algeria. He originally planned to fly from Tripoli to Baghdad, where Yamani and Amusegar were to be killed. 30 non-Arab hostages were released in Algeria, and several more in Tripoli. After that, 10 people remained hostage. Carlos had a telephone conversation with Algerian President Huari Boumedienne, who told Carlos that the death of the oil ministers would lead to an attack on the plane.

Boumedienne must have also offered Carlos asylum, and possibly financial compensation for failing to complete his assignment. Carlos expressed regret that he could not kill Yamani and Amusegar, after which he and his accomplices left the plane and fled.

Sometime after the attack, Carlos' accomplices reported that the operation was commanded by Wadi Haddad, the founder of the Popular Front for the Liberation of Palestine. They also claimed that the idea and funding came from the Arab president, who is widely believed to be Muammar Gaddafi of Libya, an OPEC country. Other militants, Bassam Abu Sharif and Klein, claimed that Carlos received and retained a ransom of $ 20 million to $ 50 million from the "Arab president." Carlos claimed that Saudi Arabia paid the ransom on behalf of Iran, but that the money was "diverted along the way and lost in the revolution."

Carlos was only caught in 1994 and is serving a life sentence for at least 16 other murders.

Oil crisis 1979 - 1980, oil surplus 1980

In response to the wave of nationalization of oil reserves and high oil prices in the 1970s. industrialized countries have taken a number of steps to reduce their dependence on OPEC. Especially after the quotes broke new records, approaching $ 40 a barrel in 1979-1980, when the Iranian revolution and the Iran-Iraq war disrupted regional stability and oil supplies. In particular, the shift of energy companies to coal, natural gas and nuclear energy began, and governments began to allocate multi-billion dollar budgets for research programs to find alternatives to oil. Private companies have begun developing large oil fields in non-OPEC countries, in areas such as Siberia, Alaska, the North Sea and the Gulf of Mexico.

By 1986, global oil demand had fallen by 5 million barrels per day, production in non-member countries rose substantially, and OPEC's market share fell from about 50% in 1979 to less than 30% in 1985. As a result, the price of oil declined for six years, culminating in a halving in 1986 in 1986.

To combat the decline in oil revenues, Saudi Arabia in 1982 demanded that OPEC verify the implementation of oil production quotas from cartel member countries. When it turned out that other countries did not comply with the requirement, Saudi Arabia reduced its own production from 10 million barrels per day in 1979-1981. up to 3.3 million barrels per day in 1985. However, when even such a measure could not stop the fall in prices, Saudi Arabia changed its strategy and flooded the market with cheap oil. As a result, oil prices fell below $ 10 per barrel, and producers with higher production costs incur losses. OPEC member countries that did not comply with the agreement began to limit production in order to maintain prices.

1990 - 2003 Overproduction and supply disruptions.

Before the invasion of Kuwait in August 1990, Iraqi President Saddam Hussein urged the Organization of Petroleum Exporting Countries to halt overproduction and raise oil prices to provide financial assistance to OPEC countries and accelerate recovery from the wars of 1980-1988 in Iran. These two Iraqi wars against other OPEC members seriously shook the organization's cohesion, and as a result of supply disruptions, oil prices began to decline rapidly. Even Al-Qaeda’s attack on skyscrapers in New York in September 2001 and the US invasion of Iraq in March 2003 had less short-term negative impact on oil prices, as OPEC cooperation resumed during this period.

In the 1990s, two countries left OPEC and joined in the mid-70s. Ecuador came out in 1992, because it refused to pay an annual membership fee of $ 2 million, and also believed that it needed to produce more oil than the quota restrictions prescribed (in 2007, the country became part of the organization again). Gabon suspended membership in January 1995 (also returned in July 2016).

It is worth noting that the volume of oil production in Iraq, despite the country's permanent membership in the organization since its inception, did not fall under quota regulation from 1998 to 2016 due to political difficulties.

The decline in demand caused by the Asian financial crisis of 1997-1998 led to lower oil prices to 1986 levels. After quotes fell to around $ 10 per barrel, diplomatic negotiations led to lower production volumes by OPEC, Mexico and Norway. After prices fell again in November 2001, OPEC participants, Norway, Mexico, Russia, Oman and Angola agreed to reduce production from January 1, 2002 by 6 months. In particular, OPEC reduced production by 1.5 million barrels per day.

In June 2003, the International Energy Agency (IEA) and the Organization of Petroleum Exporting Countries held their first joint seminar on energy issues. Since then, meetings of the two organizations have been held on a regular basis.

2003 - 2011 Oil market volatility.

In 2003 - 2008 in Iraq, occupied by the USA, there were mass riots and sabotages. This coincided with a rapidly growing demand for oil from China and commodity investors, periodic attacks on the Nigerian oil industry and a reduction in reserve capacity to protect against potential shortages.

This combination of events caused a sharp increase in oil prices to levels well above those previously set by the organization. Price volatility reached its limit in 2008, when WTI crude oil rose to a record $ 147 per barrel in July, and then fell to $ 32 per barrel in December. It was the time of the greatest global economic downturn since World War II.

The organization’s annual revenue from oil exports also set a new record in 2008. It was estimated at about $ 1 trillion, and reached similar annual rates in 2011-2014 before falling again. Towards the outbreak of the Libyan Civil War in 2011 and the Arab Spring, OPEC began to make clear statements to counter “excessive speculation” in the oil futures markets, blaming financial speculators for increasing volatility beyond market fundamentals.

In May 2008, Indonesia announced the withdrawal from the organization upon expiration of its membership, explaining its decision to switch to oil imports and the inability to comply with the prescribed production quota (in 2016, Indonesia was again part of the organization for a period of several months).

2008 Dispute over production volumes.

The various economic needs of OPEC member countries often lead to domestic debates on production quotas. The poorer members insisted on reducing production from other countries in order to raise the price of oil and, therefore, their own incomes. These proposals conflict with Saudi Arabia's long-term partnership strategy with global economic powers to ensure stable oil supplies, which should contribute to economic growth. Part of the core of this policy is Saudi Arabia's concern that excessively expensive oil or unreliable supplies will encourage industrial countries to save energy and develop alternative fuels, reducing global oil demand and ultimately leaving reserves in the ground. Saudi Arabian Oil Minister Yamani commented on the issue in 1973 with the following words: “The Stone Age did not end because we ran out of stones.”

On September 10, 2008, when oil prices were still at around $ 100 per barrel, an oil dispute arose at an OPEC meeting. Then, representatives of Saudi Arabia reportedly left the negotiation session, at which other members voted to reduce OPEC production. Although the Saudi delegates officially approved the new quotas, they anonymously stated that they would not abide by them. The New York Times quoted one delegate as saying: “Saudi Arabia will satisfy market demand. We will see what the market requires, and we will not leave the buyer without oil. The policy has not changed. ” A few months later, oil prices fell to $ 30 and did not return to $ 100 until the civil war in Libya in 2011.

2014–2017 Oversupply of oil.

During 2014–2015 OPEC member countries constantly exceeded their production ceiling. At that time, China experienced a slowdown in economic growth, and US oil production nearly doubled compared to 2008 and approached the world leaders in terms of production volumes - Saudi Arabia and Russia. Such a leap has occurred due to a significant improvement and spread of technology for the development of shale oil through "fracking". These events, in turn, led to a decrease in requirements for oil imports in the United States (closer to energy independence), a record volume of world oil reserves and a drop in oil prices, which continued in early 2016.

Despite a global oil surplus, on November 27, 2014 in Vienna, Saudi Arabian Oil Minister Ali al-Naimi blocked calls from poorer OPEC members to cut production in support of prices. Naimi argued that the oil market should be left without interference in order for it to balance on its own at lower prices. According to his arguments, OPEC's market share should recover due to the fact that expensive shale oil production in the USA at such low prices would be unprofitable.

A year later, at the time of the OPEC meeting in Vienna on December 4, 2015, the organization exceeded the production ceiling for 18 consecutive months. At the same time, US oil production decreased compared to the peak only slightly. World markets appeared to be crowded with at least 2 million barrels per day, even despite the Libyan war, which resulted in a decline in production in the country by 1 million barrels per day. Oil producers were forced to make serious adjustments to withstand prices at $ 40. Indonesia reunited with an export organization for some period, Iraqi production increased after years of unrest, Iran was ready to restore production with the lifting of international sanctions, hundreds of world leaders under the Paris Climate Agreement pledged to limit carbon emissions from fossil fuels, and solar technology became more and more competitive and common. In light of all this market pressure, the organization decided to postpone an inefficient production ceiling until the next ministerial conference in June 2016. By January 20, 2016, the OPEC Oil Basket price fell to $ 22.48 per barrel, i.e. less than one fourth of its maximum since June 2014 ($ 110.48), and less than one sixth of its record reached in July 2008 ($ 140, 73).

In 2016, an oversupply of oil was partially offset by a significant reduction in production in the United States, Canada, Libya, Nigeria and China, and the price of the basket gradually rose to $ 40 per barrel. The organization regained a modest percentage of market share, maintained the status quo at its June conference, and endorsed “prices at levels suitable for both producers and consumers,” although many manufacturers were still experiencing severe economic difficulties.

2017–2019 Production reduction.

In November 2016, OPEC member states, tired of declining profits and reduced financial reserves, finally signed an agreement to reduce production and impose quotas (Libya and Nigeria, which was destroyed as a result of unrest, were exempted from compliance with the agreement). Along with this, several countries outside the organization, including Russia, supported the Organization of Petroleum Exporting Countries in their decision to limit production. This consolidation is called the OPEC + agreement.

In 2016, Indonesia, instead of agreeing to the requested 5% reduction in production, again announced a temporary suspension of membership in the organization.

During 2017, oil prices fluctuated around $ 50 per barrel, and in May 2017, OPEC countries decided to extend the production limit until March 2018. Well-known oil analyst Daniel Yergin described the relationship between OPEC and shale producers with the words: “mutual existence, when both parties learn to live at prices that are lower than they would like.”

In December 2017, Russia and OPEC agreed to extend production cuts by 1.8 million barrels per day until the end of 2018.

On January 1, 2019, Qatar left the organization. According to the New York Times, this is a strategic response to the ongoing boycott of Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.

On June 29, 2019, Russia again agreed with Saudi Arabia to extend the initial reduction in production by 2018 for six to nine months.

In October 2019, Ecuador announced its withdrawal from the organization on January 1, 2020 due to financial problems.

In December 2019, OPEC and Russia agreed on one of the largest production cuts to date. The agreement will last during the first three months of 2020, and is aimed at preventing an oversupply of oil on the market.

In September last year, OPEC celebrated its anniversary. It was created in 1960. Today, OPEC countries occupy a leading position in the field of economic development.

OPEC translated from English "OPEC" - "Organization of Petroleum Exporting Countries." This is an international organization created to control the volume of sales of crude oil and set the price for it.

By the time OPEC was established, there was a substantial surplus of black gold in the oil market. The appearance of excess oil is due to the rapid development of its vast deposits. The main oil supplier was the Middle East. In the mid 50-ies of the twentieth century, the USSR entered the oil market. The volume of black gold mining in our country has doubled.

The result was serious competition in the market. Against this background, oil prices fell significantly. This contributed to the creation of the OPEC organization. 55 years ago, this organization aimed at maintaining an adequate level of oil prices.

What are the countries

The states that are part of this organization in 2020 produce only 44% of the world's oil production. But these countries have a huge impact on the black gold market. This is due to the fact that the states that are members of this organization own 77% of all proven oil reserves worldwide.

Saudi Arabia's economy is based on oil exports. Today, this black gold exporting state holds 25% of the oil reserves. Thanks to the export of black gold, the country receives 90% of its income. The GDP of this largest exporting state is 45 percent.

The second place in gold mining is given. Today, this state, which is a major exporter of oil, occupies 5.5% of the world market. No less large exporter should be considered. Extraction of black gold brings the country 90% of the profits.

Until 2011, Libya occupied an enviable place in oil production. Today, the situation in this once richest state can be called not just complicated, but critical.

History of OPEC:

The third largest oil reserve is. The southern deposits of this country can produce up to 1.8 million black gold in one day only.

It can be concluded that most of the OPEC member states are dependent on the profits that their oil industry brings. The only exception to these 12 states is Indonesia. This country also receives income from industries such as:

For other powers that are part of OPEC, the percentage of dependence on the sale of black gold can be from 48 to 97 indicators.

When difficult times come, then countries that have rich oil reserves have only one way out - to diversify the economy as soon as possible. This is due to the development of new technologies that contribute to the conservation of resources.

Organization Policy

In addition to the goal of unification and coordination of oil policy, the organization has an equally priority task - to consider the stimulation of economical and regular deliveries of goods as members of those states that are consumers. Another major goal is to obtain a fair return on capital. This is true for those who are actively investing in industry.

The main management bodies of OPEC should include:

Conference.
Tip.
Secretariat.

The conference is the supreme body of this organization. The highest position should be considered the position of Secretary General.

Meetings of energy ministers and black gold experts take place twice a year. The main goal of the meeting is to assess the state of the international oil market. Another priority is the development of a clear plan to stabilize the situation. The third goal of the meeting is to predict the situation.

The forecast of the organization can be judged by the situation in the black gold market last year. Representatives of the member countries of this organization argued that prices would be kept in the amount of US $ 40-50 per barrel. At the same time, representatives of these states did not exclude that prices could rise up to $ 60. This could only happen if China's economy grew rapidly.

Judging by the latest information, the leadership of this organization has no desire to reduce the amount of oil products extracted. Also, the OPEC organization does not have plans for interference in the activity of international markets. According to the leadership of the organization, it is necessary to give the international market a chance to self-regulation.

Today, oil prices are close to a critical point. But the situation on the market is such that prices can both rapidly fall and soar.

Attempts to resolve the situation

After the start of the next economic crisis, which swept the whole world, the OPEC countries decided to gather again. Before that, 12 states gathered when there was a record drop in black gold futures. Then the size of the fall was catastrophic - up to 25 percent.

Judging by the forecast given by the experts of the organization, the crisis will not affect only Qatar. In 2018, the price of Brent crude oil was about $ 60 per barrel.

Price policy

Today, the situation for the OPEC participants is as follows:

Iran is the price by which the state’s deficit-free budget is provided - $ 87 (the share in the organization is 8.4%).
Iraq - $ 81 (share in the organization - 13%).
Kuwait - $ 67 (share in the organization - 8.7%).
Saudi Arabia - $ 106 (share in the organization - 32%).
UAE - $ 73 (share in the organization - 9.2%).
Venezuela - $ 125 (share in the organization - 7.8%).

According to some reports, at an informal meeting, Venezuela came up with a proposal to reduce current oil production to 5 percent. This information has not yet been confirmed.

The situation within the organization itself can be called critical. The year of considerably cheaper black gold hit hard in the pocket of the OPEC states. According to some reports, the total revenue of the participating states may fall to 550 billion US dollars per year. The previous five-year period showed much higher rates. Then the annual income of these countries is 1 trillion. US $

The content of the article

ORGANIZATION OF OIL EXPORTER COUNTRIES (OPEC)(Organization of Petroleum Exporting Countries, OPEC) is an international economic organization that unites most of the leading oil exporting countries. Regulates the volume of production and the price of oil in the world market. OPEC members control 2/3 of the world's oil reserves.

OPEC headquarters was originally located in Geneva, later moved to Vienna. Twice a year (apart from extraordinary events), OPEC conferences are held at which each country is represented by a minister responsible for oil production. In addition to official conferences, ministers also hold informal meetings. The main subject of negotiations is the regulation of oil production. The main decisions are made by the unanimity rule (veto right, no right of abstinence). The role of the president of OPEC, who heads the organizational work on conferences and represents OPEC at various international forums, is played by one of the ministers of the participating countries. At the 132nd extraordinary OPEC conference in July 2004, Sheikh Ahmad al-Fahd al-Sabah, Minister of Kuwait's Oil Industry, was elected.

In the 2000s, the share of 11 OPEC countries in world oil production was approximately 35–40%, and in export — 55%. This dominant position allows them to exert a strong influence on the development of not only the global oil market, but also the global economy as a whole.

OPEC in the 1960-1970s: the path to success.

The organization was created in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela to coordinate their relations with Western oil refineries. As an international economic organization, OPEC was registered with the UN on September 6, 1962. Later, Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (later) joined OPEC. 1973, left OPEC in 1992) and Gabon (1975, left in 1996). As a result, OPEC united 13 countries (Table 1) and became one of the main participants in the global oil market.

OPEC countries

Table 1. OPEC COUNTRIES DURING THE HIGHEST TAKEOFF AND THEIR INFLUENCE (1980)
Country	GNP per capita, USD	Oil share in export value,%	Oil production, million tons	Proved oil reserves, million tons
United Arab Emirates (UAE)	25,966	93,6	83	4,054
Qatar	25,495	95,2	23	472
Kuwait	19,489	91,9	81	9,319
Saudi Arabia	14,049	99,9	496	22,946
Libya	11,327	99,9	86	3,037
Gabon	6,138	95,3	9	62
Venezuela	4,204	94,7	113	2,604
Iraq	3,037	99,2	130	4,025
Algeria	2,055	91,7	51	1,040
Iran	1.957	94,5	77	7,931
Ecuador	1.203	54,1	11	153
Nigeria	844	95,3	102	2,258
Indonesia	444	72,1	79	1,276

The creation of OPEC was caused by the desire of oil exporting countries to coordinate efforts to prevent a decline in world oil prices. The reason for the formation of OPEC was the action of the Seven Sisters - the world cartel that united the companies British Petroleum, Chevron, Exxon, Gulf, Mobile, Royal Dutch Shell and Texaco. These firms, which controlled the processing of crude oil and the sale of petroleum products worldwide, unilaterally reduced the purchase price of oil, on the basis of which they paid income taxes and royalties (rents) for the right to develop natural resources for oil-producing countries. In the 1960s, there was an excess supply of oil on world markets, and initially the goal of OPEC was to coordinate oil production to stabilize prices.

In the 1970s, under the influence of the rapid development of transport and the construction of thermal power plants, world oil demand rose sharply. Now oil producing countries could consistently increase the rent payments of oil producers, significantly increasing their income from oil exports. Moreover, artificial containment of oil production led to an increase in world prices (Table 2).

Dynamics of current prices and rental payments for reference oil

Table 2. DYNAMICS OF CURRENT PRICES AND RENTAL PAYMENTS FOR REFERENCE OIL *
Years	Current selling prices, dollars per barrel	Rental payments (royalties plus income tax)
1960	1,50	0,69
1965	1,17	0,78
February 1971	1,65	1,19
January 1973	2,20	1,52
November 1973	3,65	3,05
May 1974	9,55	9,31
October 1975	11,51	11,17
* Reference oil is considered to be oil from Saudi Arabia. Oil from other countries is converted to a reference depending on fuel value.

In 1973-1974, OPEC managed to achieve a sharp increase in world oil prices by 4 times, in 1979 - an additional 2 times. The formal reason for price inflation was the Arab-Israeli war of 1973: demonstrating solidarity in the struggle with Israel and its allies, the OPEC countries for some time altogether stopped their oil shipment. Because of the “oil shock”, the crisis of 1973–1975 was the worst global economic crisis since the Second World War. Having formed and strengthened in the fight against the Seven Sisters oil cartel, OPEC itself has become the strongest cartel in the world oil market. By the early 1970s, its members accounted for approximately 80% of reliable reserves, 60% of production and 90% of oil exports to non-socialist countries.

The second half of the 1970s was the peak of OPEC's economic prosperity: oil demand remained high, soaring prices brought huge profits to oil exporting countries. It seemed as if this prosperity would last for many decades.

The economic success of the OPEC countries was of strong ideological significance: it seemed that the developing countries of the “poor South” were able to achieve a turning point in the struggle against the developed countries of the “rich North”. OPEC's success was superimposed on the rise of Islamic fundamentalism in many Arab countries, which further enhanced the status of these countries as a new force in world geoeconomics and geopolitics. Recognizing himself as a representative of the Third World, in 1976 OPEC organized the OPEC Fund for International Development, a financial institution that provides assistance to non-OPEC developing countries.

The success of this association prompted other Third World countries exporting commodities (copper, bauxite, etc.) to try to use their experience, also coordinating their actions to increase revenues. However, these attempts, as a rule, turned out to be unsuccessful, since other commodities did not have such a high demand as oil.

OPEC in the 1980-1990s: a tendency to weaken.

The economic success of OPEC was, however, not very sustainable. In the mid-1980s, world oil prices almost halved (Fig. 1), drastically reducing OPEC's revenues from “petrodollars” (Fig. 2) and burying hopes for long-term prosperity.

The weakening of OPEC was caused by two groups of reasons - a relative decrease in oil demand and an increase in its supply.

On the one hand, the “oil shock” stimulated the search for new sources of energy that are not related to oil production (in particular, the construction of nuclear power plants). The widespread adoption of energy-saving technologies generally led to a much slower increase in energy demand than expected. On the other hand, the quota system for oil production by OPEC members turned out to be unstable - it was undermined both from the outside and from the inside.

Some countries, which were also large oil exporters, were not included in OPEC - these are Brunei, Great Britain, Mexico, Norway, Oman and, most importantly, the USSR, which, according to some estimates, has the world's second largest potential oil reserves. These countries benefited from OPEC-initiated growth in world prices, but they did not comply with its decisions to limit oil production.

Inside OPEC itself, unity of action was often disrupted. OPEC's organic weakness is that it unites countries whose interests are often opposed. Saudi Arabia and other countries of the Arabian Peninsula are sparsely populated, but they have huge oil reserves, receive large investments from abroad and maintain close relations with the “Seven Sisters”. Some other OPEC member countries, such as Nigeria and Iraq, are characterized by high population and poverty, they implement expensive economic development programs and have high external debt. These countries are forced to extract and sell as much oil as possible in order to earn foreign exchange earnings, especially if their prices are reduced. The political orientation of the OPEC countries is also different: if Saudi Arabia and Kuwait relied on US support, then many other Arab countries (Iraq, Iran, Libya) pursued anti-American policies.

The discord between the OPEC countries is aggravated by political instability in the Persian Gulf. In the 1980s, Iraq and Iran brought oil production to a maximum level to pay for the costs of a war with each other. In 1990, Iraq invaded Kuwait, trying to annex it, but the Persian Gulf War (1990–1991) ended in the defeat of Iraq. International trade sanctions were applied to the aggressor, which severely limited Iraq’s ability to export oil. When American troops occupied Iraq in 2003, it generally removed this country from the list of independent participants in the global oil market.

As a result of the influence of these factors, OPEC lost the role of the main regulator of world oil prices and became only one (albeit very influential) of the participants in exchange trading in the global oil market (Table 3).

The evolution of the mechanism of oil pricing

Table 3. EVOLUTION OF THE PRICE MECHANISM IN THE WORLD OIL MARKET IN THE SECOND HALF of the 20th century
Market characteristics	Stages of development of the global oil market
Market characteristics	Until 1971	1971–1986	After 1986
Pricing principle	Cartel		Competitive
Who sets the price	Cartel of oil refining corporations “Seven Sisters”	13 OPEC countries	Stock exchange
Oil demand dynamics	Steady growth	Alternating growth and decline	Slow growth

Prospects for the development of OPEC in the 21st century.

Despite the difficulties of control, oil prices throughout the 1990s remained relatively stable compared to the fluctuations they experienced in the 1980s. Moreover, since 1999, oil prices have risen again. The main reason for the change in trend was OPEC initiatives to limit oil production, supported by other large oil producing countries that have observer status in OPEC (Russia, Mexico, Norway, Oman). Current world oil prices in 2005 reached a historic high, exceeding $ 60 per barrel. However, adjusted for inflation, they still remain below the 1979-1980 level, when the price in modern terms exceeded $ 80, although they surpass the 1974 level when the price amounted to $ 53 in modern terms.

The outlook for OPEC remains uncertain. Some believe that the organization managed to overcome the crisis of the second half of the 1980s - early 1990s. Of course, the former economic power, as in the 1970s, cannot be returned to it, but on the whole, OPEC still has favorable development opportunities. Other analysts believe that OPEC states are unlikely to succeed in complying with established oil production quotas and a clear unified policy for a long time.

An important factor in the uncertainty of OPEC's prospects is related to the uncertainty of the development of global energy as such. If serious success is achieved in the use of new energy sources (solar energy, nuclear energy, etc.), the role of oil in the global economy will decrease, which will lead to a weakening of OPEC. Official forecasts, however, most often predict the preservation of oil as the planet’s main energy resource for the coming decades. According to the report International Energy Forecast 2004prepared by the US Department of Energy’s Information Office, oil demand will increase, so that with existing oil reserves, oil fields will be depleted by about 2050.

Another uncertainty factor is the geopolitical situation on the planet. OPEC has developed in a situation of relative balance of power between the capitalist powers and the countries of the socialist camp. However, today the world has become more monopolar, but less stable. On the one hand, many analysts fear that the US, as a “world policeman,” may begin to use force against those who pursue an economic policy that does not coincide with America's interests. The events of the 2000s in Iraq show that these forecasts are justified. On the other hand, the growth of Islamic fundamentalism may increase political instability in the Middle East, which will also weaken OPEC.

Since Russia is the largest oil exporting country that is not a member of OPEC, the question of our country's joining this organization is periodically discussed. However, experts point out the divergence of the strategic interests of OPEC and Russia, which is more profitable to remain an independent force in the oil market.

Consequences of OPEC.

The high incomes received by OPEC countries from oil exports have a dual effect on them. On the one hand, many of them manage to improve the standard of living of their citizens. On the other hand, petrodollars can become a factor slowing down economic development.

Among the OPEC countries, even the richest in oil (Table 4), there is not one that has managed to become sufficiently developed and modern. The three Arab countries - Saudi Arabia, the UAE and Kuwait - can be called rich, but can not be called developed. An indicator of their relative backwardness is at least the fact that in all three the monarchical regimes of the feudal type are still preserved. Libya, Venezuela and Iran are at about the same low level of prosperity as Russia. Two more countries, Iraq and Nigeria, should be considered, by world standards, not just poor, but very poor.

Countries with the largest oil reserves

Table 4. THE COUNTRIES WITH THE BEGINNING OF THE 2000S THE BIGGEST OIL RESERVES
Country	Share in world oil reserves,%	Share in world oil production by exporting countries,%	GDP per capita, thousand dollars
Saudi Arabia	27	16	13,3
Russia (not included in OPEC)	13	15	7,1
Iraq	10	5	0,8
United Arab Emirates	10	4	20,5
Kuwait	10	4	18,7
Iran	9	7	6,0
Venezuela	7	6	5,7
Libya	3	3	7,6
Nigeria	2	4	0,9
USA (not part of OPEC)	2	0	34,3

The contrast between natural resources and the lack of noticeable development success is explained by the fact that the abundant oil reserves (as well as other "free" natural resources) create a strong skill to fight not for the development of production, but for political control over the exploitation of resources. When the country does not have easily accessible natural resources, then income must be obtained by productive activities, the benefits of which go to the majority of citizens. If the country is generously endowed with natural resources, then its elite is more inclined to engage in rent seeking than production. Natural wealth can thus turn into a social disaster - the elite is getting richer, and ordinary citizens are living in poverty.

Among the OPEC countries there are, of course, examples where natural resources are exploited relatively efficiently. Vivid examples are Kuwait and the United Arab Emirates. In these countries, current oil revenues are not only “consumed”, but are also put aside in a special reserve fund for future expenses, and are also spent on raising other sectors of the economy (for example, the tourism business).

Yuri Latov, Dmitry Preobrazhensky

5 (100%) 2 vote [s]

On the news you can often hear about the next meeting of OPEC countries. In this article we will talk about what kind of organization it is, who is included there and what its mission is.

What is OPEC in simple words

OPEC (from the English. "Organization of Petroleum Exporting Countries", OPEC) - "Organization of Petroleum Exporting Countries") is an international organization of oil producing countries for setting quotas for oil production. It includes countries whose economies are highly dependent on oil exports.

The Organization of Petroleum Exporting Countries was created in September 10-14, 1960 in Baghdad at the initiative of Venezuela. The headquarters was initially located in Geneva, but since September 1, 1965 has been located in Vienna.

OPEC members account for about 70% of all oil reserves. However, the production of all countries included in the organization is only 35% of the global production volume. We can say that they produce oil moderately so as not to deplete their reserves greatly. Although many stocks are already heavily depleted until 1960.

The main task of OPEC is to regulate oil prices. This is an open market where price is determined by supply and demand. Demand usually does not fluctuate as much as supply. For example, one country can begin to produce more oil, which will lead to a collapse in value by 5-10%.

The organization sets a quota for daily oil production. Participants must comply with these rules. Although, as practice shows, sometimes members may violate the agreement.

The approval by the Board of Governors of each mandate from the country occurs every two years.

OPEC countries

At the time of 2019, OPEC members are 14 countries:

Algeria - since 1969
Angola - 2007-present
Venezuela - from 1960 to the present
Gabon - 1975-1995; 2016 - present
Iran - from 1960 to the present
Iraq - from 1960 to the present
Kuwait - from 1960 to the present
Congo
Libya - 1962-present
Nigeria - from 1971 to the present
Saudi Arabia - from 1960 to the present
United Arab Emirates - from 1967 to the present
Ecuador - 1973-1992, 2007 - present
Equatorial Guinea - from 2017

Countries that left OPEC

Qatar has been a member since 1961. However, on January 1, 2019, he left the organization.
Indonesia - 1962-2009, entered in January 2016 and left in October of that year

Russia is not a member of OPEC. Since 1998, Russia has been an observer and participates in sessions of the OPEC conference.

OPEC basket

The OPEC basket (from the English "OPEC Reference Basket") is the weighted average price of all grades of oil from the countries of the organization. This indicator appeared in 1987.

Arab Light (Saudi Arabia)
Basra Light (Iraq)
Bonny Light (Nigeria)
Es Sider (Libya)
Girassol (Angola)
Minas (Indonesia)
Iran Heavy (Iran)
Kuwait Export (Kuwait)
Merey (Venezuela)
Murban (UAE)
Oriente (Ecuador)
Qatar Marine (Qatar). No longer included
Saharan Blend (Algeria)

The maximum basket price of $ 140.73 per barrel was recorded in 2007. After that, the global crisis began and the price of oil is much lower ($ 60- $ 70 for 2019).

See also the video about the "History of OPEC":

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