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OPEC

OPEC, the Organization of the Petroleum Exporting Countries, was founded in 1960 to coordinate oil production and manage global prices among its member nations, controlling 30-40% of global oil production. Its main goals include stabilizing oil markets and ensuring steady income for oil-producing countries, but it faces criticisms for price manipulation and challenges from the U.S. shale boom and energy transitions. OPEC+ includes additional major producers like Russia and was formed to enhance OPEC's influence after the 2014 oil price crash.

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17 views2 pages

OPEC

OPEC, the Organization of the Petroleum Exporting Countries, was founded in 1960 to coordinate oil production and manage global prices among its member nations, controlling 30-40% of global oil production. Its main goals include stabilizing oil markets and ensuring steady income for oil-producing countries, but it faces criticisms for price manipulation and challenges from the U.S. shale boom and energy transitions. OPEC+ includes additional major producers like Russia and was formed to enhance OPEC's influence after the 2014 oil price crash.

Uploaded by

o.hisham2727
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Mina&Omar

OPEC: The Organization of the


Petroleum Exporting Countries
What is OPEC?
OPEC stands for Organization of the Petroleum Exporting Countries.
It is an international group that coordinates oil production and policies among member countries to
manage global oil prices. OPEC controls 30–40% of global oil production. Influences about 70% of global
proven oil reserves.

Founding
Founded in 1960 in Baghdad by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
Formed as a reaction to Western oil companies (the 'Seven Sisters') controlling oil prices and production.

Current OPEC Members (as of 2025)


• Algeria
• Angola
• Congo (Republic of the Congo)
• Equatorial Guinea
• Gabon
• Iran
• Iraq
• Kuwait
• Libya
• Nigeria
• Saudi Arabia
• United Arab Emirates (UAE)
• Venezuela

Some former members (like Indonesia, Qatar, Ecuador) left OPEC.


Main Goals
• Coordinate and unify petroleum policies among members.
• Stabilize global oil markets.
• Ensure steady income for oil-producing nations.
• Secure regular supply of oil for consumers.

How OPEC Operates


OPEC sets production quotas (limits on how much oil each member can produce).
By adjusting supply:
- Less oil → Higher prices.
- More oil → Lower prices.

Key Historical Events


• 1973 Oil Crisis: Arab OPEC members placed an oil embargo on countries supporting Israel during the
October war, causing oil prices to quadruple. Resulted in a global recession and gas shortages.

Criticisms
OPEC is accused of behaving like a cartel, manipulating oil prices instead of letting free markets decide.
Their actions can cause global economic instability (price shocks, recessions).

Modern Challenges
• U.S. Shale Boom: U.S. became top oil producer (2018), reducing OPEC’s dominance.
• Energy Transition: Global shift towards renewable energy threatens future oil demand.
• Internal Conflicts: Disagreements between members

OPEC+ = OPEC countries plus other major producers like Russia, Kazakhstan, Mexico.
 Formed after the 2014 oil price crash when OPEC alone couldn't stabilize prices.
 OPEC+ is more powerful.

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