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The Organization of the Petroleum Exporting Countries
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)
Thank you for your attention!