Organization of the Petroleum Exporting Countries (OPEC)

  • OPEC is an intergovernmental organization of 14 nations, founded in 1960 in Baghdad by the first five members, and headquartered since 1965 in Vienna.opec flag

  • As of 2016, the 14 countries accounted for 43 percent of global oil production and 73 percent of the world’s “proven” oil reserves, giving OPEC a major influence on global oil prices.

  • As of July 2016, OPEC’s members are Algeria, Angola, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia (the de facto leader), United Arab Emirates, and Venezuela.

  • Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern countries that surround the oil-rich Persian Gulf.

  • The formation of OPEC marked a turning point toward national sovereignty over natural resources, and OPEC decisions have come to play a prominent role in the global oil market and international relations.

  • The 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 OPEC revenue and wealth, with long-lasting and far-reaching consequences for the global economy.

  • In the 1980s, OPEC started setting production targets for its member nations; and generally when the production targets are reduced, oil prices increase.

  • In December 2014, “OPEC and the oil men” ranked as #3 on Lloyd’s list of “the top 100 most influential people in the shipping industry”.

Membership

Current member countries

  • As of Sep 2016, OPEC has 14 member countries: six in the Middle East (Western Asia), one in Southeast Asia, five in Africa, and two in South America.

  • One petroleum barrel (bbl) is approximately 42 US gallons, or 159 liters, or 0.159 m3, varying slightly with temperature.

  • To put the production numbers in context, a supertanker typically holds 2,000,000 barrels (320,000 m3), and the world’s current production rate would take approximately 60 years to exhaust the current proven reserves.

  • The UAE was founded in December 1971; its OPEC membership originally belonged to the Emirate of Abu Dhabi.

Country

Region

Membership Years

Oil Production
(bbl/day, 2015)

Proven Reserves
(bbl, 2015)

Algeria

Africa

1969–

1,370,000

12,200,000,000

Angola

Africa

2007–

1,842,000

9,010,000,000

Ecuador

S. America

1973–1992, 2007–

543,000

8,830,000,000

Gabon

Africa

1975–1994, 2016–

213,000

2,000,000,000

Indonesia

S.E. Asia

1962–2008, 2016–

786,000

3,690,000,000

Iran

Middle East

1960[B]–

3,300,000

157,800,000,000

Iraq

Middle East

1960[B]–

4,054,000

144,200,000,000

Kuwait

Middle East

1960[B]–

2,562,000

104,000,000,000

Libya

Africa

1962–

404,000

48,360,000,000

Nigeria

Africa

1971–

2,317,000

37,070,000,000

Qatar

Middle East

1961–

1,532,000

25,240,000,000

Saudi Arabia

Middle East

1960[B]–

10,046,000

268,290,000,000

U.A.E

Middle East

1967[C]–

2,820,000

97,800,000,000

Venezuela

S. America

1960[B]–

2,500,000

298,350,000,000

OPEC Total

34,288,000

1,216,840,000,000

World Total

80,043,000

1,656,130,000,000

OPEC Percent

43%

73%

Lapsed members

  • For countries that export petroleum at relatively low volume, their limited negotiating power as OPEC members would not necessarily justify the burdens imposed by OPEC production quotas and membership costs.

  • Ecuador withdrew from OPEC in December 1992 and it rejoined in October 2007.

  • Gabon to suspend membership in January 1995; it rejoined in July 2016.

  • In May 2008, Indonesia announced that it would leave OPEC & rejoined the organization in January 2016.

  • Some commentators consider that the United States was a de facto member of OPEC during its formal occupation of Iraq, due to its leadership of the Coalition Provisional Authority in 2003–2004.

  • But this is not borne out by the minutes of OPEC meetings, as no US representative attended in an official capacity.

Leadership and decision-making

  • The OPEC Conference is the supreme authority of the organization, and consists of delegations normally headed by the oil ministers of member countries.

  • The chief executive of the organization is the OPEC Secretary General.

  • The Conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary.

  • It generally operates on the principles of unanimity and “one member, one vote“, with each country paying an equal membership fee into the annual budget.

  • However, since Saudi Arabia is by far the largest and most-profitable oil exporter in the world, with enough capacity to function as the traditional swing producer to balance the global market, it serves as “OPEC’s de facto leader”.

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