The Organization of the Petroleum Exporting Countries (OPEC) is a permanent, Intergovernmental Organization, created at the Baghdad Conference held at Iraq in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
It initially had its headquarters in Geneva, Switzerland which was then moved to Vienna, Austria in 1965.
It accounts for an estimated 44 percent of global oil production and 81.5 percent of the world’s “proven” oil reserves.
Government representatives from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss ways to increase the price of crude oil produced by their countries, and ways to respond to unilateral actions by the MOCs.
Despite strong opposition from the US, Saudi Arabia, along with other Arab and non-Arab oil producers, formed the Organization of Petroleum Producing Countries to get the best price possible from major oil corporations.
Originally, Arab nations advocated for Beirut or Baghdad to be the headquarters of the OPEC but under strong objections from Venezuela, on basis of neutral grounds, Geneva in Switzerland was chosen. Due to Switzerland not extending diplomatic assurances, the headquarters of OPEC was shifted to Vienna, Austria on 1st September 1st, 1965.
By the early 1970s, OPEC’s membership accounted for more than half of worldwide oil production.
The 2019 OPEC World Oil Outlook (WOO) was launched on November 5, 2019, at the Wiener Börse in Vienna, Austria.
Coordinate and unify petroleum policies among Member Countries
In order to secure fair and stable prices for petroleum producers
The efficient, economic and regular supply of petroleum to consuming nations
A fair return on capital to those investing in the industry
Currently, the Organization has a total of 13 Member Countries – Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates, and Venezuela.
The eight other Members, who later joined the five Founding Members were:
Socialist People’s Libyan Arab Jamahiriya (1962)
Qatar terminated its membership on 1 January 2019. Ecuador suspended its membership in December 1992, rejoined OPEC in October 2007, but decided to withdraw its membership of OPEC effective 1 January 2020.
Functions of OPEC:
Review the status of the international oil market and the forecasts for the future in order to agree upon appropriate actions which will promote price stability in the oil market.
Decisions about matching oil production to expected demand are taken at the meeting of the OPEC conference.
Provides research and administrative support to the secretariat body that disseminates news and information to the world at large.
OPEC and Russia:
Russia happens to be the 3rd largest supplier of Oil in the world (12% of all oil produced).
This means they too have considerable influence in controlling the global oil supply.
And back in 2017, OPEC and Russia started colluding informally to cut production and prop up prices. This came against the backdrop of oil having made some terrible lows.
So two big parties come together to keep prices stable and it obviously helped.
The non-OPECcountries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus, which now includes 11 OPEC members and 10 non-OPEC nations that aims to shore up oil prices with production cuts.