Organization of the Petroleum Exporting Countries (OPEC) - Explained
What is OPEC?
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What is OPEC?
The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization established to coordinate, unify, and solidify petroleum policies among member countries.
OPEC was established in September 1960 between 5 oil-producing countries namely; Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The membership of this organization has grown to 14 countries.
In addition to coordinating petroleum policies, OPEC was founded to provide analysis on the developments in the oil and petroleum market and to also render technical assistance to member countries. OPEC is a permanent organization that has its headquarters in Vienna, Austria.
OPEC comprises 14 member countries namely; Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Congo, Angola, Ecuador, Nigeria, Gabon, United Arab Emirates, Algeria, Libya, and Equatorial Guinea. There are certain statutes and ethics that guide OPEC. Countries must also meet certain criteria before that can become members. Ideally, a member country of OPEC must be a oil-producing country or a substantial exporter of oil. Ultimately, member countries of OPEC must share the ideals and values of the organization, they must also commit to abide by the existing principles. Not all oil-producing countries are members of OPEC, for instance, the United States, Russia and China are not members, despite that they are part of the largest oil-producing nations.
OPEC's core policy is to coordinate and unify the petroleum policies of member countries in a way that they do not destabilize the international oil market. This organization also regulates the supply of petroleum and set prices to prevent fluctuations that might affect the economy of the oil-producing country and that of the buyer. However, the development of technology has reduced the impact of OPEC in oil prices, this led to an increase in oil production and a decrease in prices, making the international oil market more difficult for OPEC to regulate.