The Organisation of the Petroleum Exporting Countries (OPEC) is an intergovernmental organisation of 13 countries. Founded on 14 September 1960 in Baghdad by the first five members who were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, since 1965, it has been headquartered in Vienna, Austria.
Although Austria is not a member of it. As of September 2018, the 13 member countries accounted for an estimated 44 % of global oil production and 81.5 % of the world’s “proven” oil reserves.
It has a major influence on global oil prices that were previously determined by the “Seven Sisters” grouping of multinational oil companies.
Impact of OPEC
The formation of OPEC marked a turning point toward national sovereignty over natural resources, and its decisions have come to play a prominent role in the global oil market and international relations. Its effect can be particularly strong when wars or civil disorders lead to extended interruptions in supply.
In the 1970s, restrictions in oil production led to a dramatic rise in oil prices and in the revenue and wealth of it, with long-lasting and far-reaching consequences for the global economy. In the 1980s, it began setting production targets for its member nations; generally, when the targets are reduced, oil prices increase. This has occurred most recently from the organisation’s 2008 and 2016 decisions to trim oversupply.
Economists have characterized this organisation as a textbook example of a cartel that cooperates to reduce market competition, but one whose consultations are protected by the doctrine of state immunity under international law.
In the 1960s and 1970s, it successfully restructured the global oil production system so that decision-making authority and the vast majority of profits is in the hands of oil-producing countries. Since the 1980s, it has had a limited impact on world oil supply and price stability, as there is frequent cheating by members on their commitments to one another, and as member commitments reflect what they would do even in the absence of this organisation .
A larger group called OPEC+ was formed in late 2016 to have more control on the global crude oil market.
Members of OPEC
Approval of a new member country requires agreement by three-quarters of OPEC’s existing members, including all five of the founders. In October 2015, Sudan formally submitted an application to join, but it is not yet a member.
List of the members
|Republic of Congo||2018|
|United Arab Emirates||1967|
What Is OPEC+ ?
A number of non-OPEC member countries also participate in the organisation’s initiatives such as voluntary supply cuts in order to further bind policy objectives between OPEC and non-OPEC members. This loose grouping of countries, known as OPEC+, includes Azerbaijan, Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Oman, Philippines, Russia, Sudan and South Sudan.
OPEC for India
India is the world’s 3rd largest importer of crude oil behind only the United States and China. Our imports from OPEC countries constitute 85 %of our total crude imports and 94 %of the gas imports.
2nd India-OPEC Institutional Dialogue was held during 22-23 May, 2017 in Vienna between Shri Dharmendra Pradhan, Minister, PNG and Secretary General of OPEC Mr. Mohammad SanusiBarkindo. The minister emphasized on ‘Asian Dividend rather than paying Asian Premium’ and stressed OPEC to work towards “Responsible Pricing” which is also important to India for its socio-economic and developmental reasons and the need for a purposeful and improved dialogue among producer and consumer countries. The minister highlighted that India should be considered as “preferred destination” for OPEC countries for supply of Crude Oil.
Reference from :- https://en.wikipedia.org/wiki/OPEC