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!