OPEC

Organization of the Petroleum Exporting Countries (OPEC)
Flag Coat of arms
OPEC and OPEC+ members
Headquarters	Vienna, Austria
Official language	English
Type	Organization[1][2]
Membership	12 OPEC members 10 OPEC+ members 6 observer states
Leaders
• Secretary General	Haitham al-Ghais
Establishment	Baghdad, Iraq
• Statute	September 1960 (63 years ago) (September 1960)
• In effect	January 1961 (63 years ago) (January 1961)
Website opec.org

The Organization of the Petroleum Exporting Countries (OPEC, /ˈoʊpɛk/ OH-pek) is an organization enabling the co-operation of leading oil-producing countries in order to collectively influence the global oil market and maximize profit. It was founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela). The organization, which currently comprises 12 member countries, accounted for an estimated 30 percent of global oil production.^[3] A 2022 report further details that OPEC member countries were responsible for approximately 38 percent of it.^[4] Additionally, it is estimated that 79.5 percent of the world's proven oil reserves are located within OPEC nations, with the Middle East alone accounting for 67.2 percent of OPEC's total reserves.^[5][6]

In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil production in favor of oil-producing states and away from an oligopoly of dominant Anglo-American oil firms (the "Seven Sisters").^[7] In the 1970s, restrictions in oil production led to a dramatic rise in oil prices with long-lasting and far-reaching consequences for the global economy. Since the 1980s, OPEC has had a limited impact on world oil-supply and oil-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 OPEC.^[8] However, since 2020, OPEC countries along with non-OPEC participants had helped in stabilising oil markets after COVID19 pandemic resulted in a collapse in oil demand. This has allowed oil markets to remain stable relative to other energy markets that experienced unprecedented volatility.^[9]

The formation of OPEC marked a turning point toward national sovereignty over natural resources. OPEC decisions have come to play a prominent role in the global oil-market and in international relations. Economists have characterized OPEC as a textbook example of a cartel^[10] (a group whose members cooperate to reduce market competition) but one whose consultations may be protected by the doctrine of state immunity under international law.^[11]

Former OPEC Secretary-General Mohammad Sanusi Barkindo has clarified the role of the organization with his statement: "OPEC is neither a monopoly nor a cartel, but a platform for stability in oil markets, serving the interests of producers, consumers, and the global economy."^[12] This aligns with OPEC's declared objective to coordinate and synchronize the oil policies of its member states. The organization is committed to stabilizing and ensuring equitable pricing for oil producers, securing a consistent and cost-effective supply of oil to consumer countries, and providing a reasonable return on investments for those involved in the petroleum sector.^[13]

Current OPEC members are^[ref] Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates and Venezuela. Meanwhile, Angola, Ecuador, Indonesia, and Qatar are former OPEC members.^[14] A larger group called OPEC+, consisting of OPEC members plus other oil-producing countries, formed in late 2016 to exert more control on the global crude-oil market.^[15] Canada, Egypt, Norway, and Oman are observer states.

On December 10, 2016, the Joint OPEC and non-OPEC Producing Countries' Ministerial Meeting took place, leading to the signing of the Declaration of Cooperation (DoC). The DoC is an agreement signed in 2017 by the OPEC+ member countries. Its primary objective is to foster collaboration and promote stability in the global oil market. Providing a framework for OPEC and non-OPEC countries, the DoC aims to work together towards achieving a balanced and sustainable market. Through production adjustments, regular meetings, and information sharing, the signatories of the DoC strive to stabilize oil prices, prevent fluctuations, and ultimately benefit oil producers and consumers. The remarkable success achieved through this unprecedented level of cooperation has led to multiple extensions of the agreement, highlighting the significance of international collaboration and collective action in addressing the complexities of the oil market.^[16][17]