general information

OPEC countries meeting

Which states are included?

Oil production in Iran

• tourism;
• timber extraction;
• gas sales;
• sale of other raw materials.

Organization policy

Meeting of OPEC member countries

Attempts to resolve the situation

Falling oil prices

Price policy

Extraordinary meeting

OPEC meeting in Vienna

Finally

Trusteeship countries

The abbreviation OPEC stands for "Association of Petroleum Exporting Countries". The main goal of the organization was to regulate prices for black gold on the world market. The need to create such an organization was obvious. In the middle of the 20th century, oil prices began to fall due to market glut. The Middle East sold the most oil. It was there that the richest deposits of black gold were discovered.

In order to pursue a policy to maintain oil prices on a global scale, it was necessary to force oil-producing countries to reduce the rate of its production. This was the only way to remove excess hydrocarbons from the world market and raise prices. OPEC was created to solve this problem.

List of countries that are members of OPEC

Today, 14 countries take part in the organization’s work. Consultations between representatives of the organization are held twice a year at OPEC headquarters in Vienna. At such meetings, decisions are made to increase or decrease oil production quotas for individual countries or the entire OPEC.

Venezuela is considered the founder of OPEC, although this country is not a leader in oil production. The palm in terms of volume belongs to Saudi Arabia, followed by Iran and Iraq. In total, OPEC controls about half of the world's black gold exports. In almost all member countries of the organization, the oil industry is the leading industry in the economy. Therefore, the decline in world oil prices causes swipe by income of OPEC members.

African countries that are part of OPEC

Of the 54 African states, only 6 are members of OPEC:

Most of the “African” OPEC participants joined the organization in the 1960-1970s. At that time, many African states freed themselves from the colonial rule of European countries and gained independence. The economy of these countries was focused mainly on the extraction of minerals and their subsequent export abroad. African countries are characterized by high populations but also high rates of poverty. To cover the costs of social programs, the governments of these countries are forced to produce a lot of crude oil. In order to withstand competition from European and American oil-producing transnational corporations, African countries joined OPEC.

Asian countries that are members of OPEC

Political instability in the Middle East predetermined the entry of Iran, Saudi Arabia, Kuwait, Iraq, Qatar, and the United Arab Emirates. The organization's Asian member countries are characterized by low population density and huge foreign investment. Oil revenues are so enormous that Iran and Iraq paid for their military expenses in the 1980s by selling oil. Moreover, these countries fought against each other.

Today, political instability in the Middle East threatens not only the region itself, but also threatens world oil prices. There is a civil war in Iraq and Libya. The lifting of sanctions from Iran threatens to increase oil production in this country, despite the obvious exceeding of the OPEC oil production quota.

Latin American countries that are members of OPEC

Only two countries Latin America included in OPEC are Venezuela and Ecuador. Despite the fact that Venezuela is the country that initiated the founding of OPEC, the state itself is politically unstable. Recently (in 2017), a wave of anti-government protests swept across Venezuela related to the ill-conceived economic policy government. Recently, the country's public debt has increased significantly. For some time, the country kept afloat due to high oil prices. But as prices fell, Venezuela's economy also collapsed.

Non-OPEC oil exporting countries

Recently, OPEC has lost its leverage over its members. This situation is largely due to the fact that several oil importing countries that are not members of OPEC have appeared on the world market.

First of all this:

Despite the fact that Russia is not a member of OPEC, it is a permanent observer in the organization. An increase in oil production by non-OPEC countries leads to a decrease in the price of oil on the world market. However, OPEC cannot influence them, since even members of the organization do not always comply with agreements and exceed permissible quotas.

Organization of Petroleum Exporting Countries (OPEC)

OPEC(transliteration of the English abbreviation OPEC - The Organization of Petroleum Exporting Countries, literally translated as the Organization of Petroleum Exporting Countries) is an international intergovernmental organization of oil-producing countries created to stabilize oil prices.

The organization was formed during an industry conference in Baghdad on September 10-14, 1960, on the initiative of five developing oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Subsequently, several more countries joined them.

OPEC's goal is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintaining the stability of world oil prices, ensuring uninterrupted supplies of raw materials to consumers and obtaining returns from investments in the oil industry.

To more effectively calculate the cost of oil produced in the member countries of the organization, the so-called “ OPEC oil basket“—a certain set of types of oil produced in these countries. The price of this basket is calculated as the arithmetic average of the cost of the varieties included in it.

Composition of OPEC

Currently, the Organization of the Petroleum Exporting Countries includes the following 12 countries:

*Ecuador was not a member of the organization from 1992 to 2007.

At a certain period, the organization also included: Indonesia (joined in 1962, suspended membership in 2009) and Gabon (joined in 1975, left in 1995).

Background and history of creation

In the 1960s of the last century, some states, in particular those that later joined OPEC, gained their independence. At the time, global oil production was ruled by a seven-company cartel known as Seven sisters«:

At some point, this cartel decided to unilaterally reduce the purchase price of oil, resulting in a reduction in taxes and rents that they paid to countries for the right to develop oil fields on their territory. This event served as a catalyst for the establishment of OPEC, the purpose of which was to gain new independent states control over their resources and their exploitation, taking into account national interests, as well as preventing a further fall in oil prices.

The organization began its activities in January 1961, creating the Secretariat of the organization in Geneva. In September 1965 he was moved to Vienna. In 1962, the Organization of the Petroleum Exporting Countries was registered with the UN Secretariat as a full-fledged intergovernmental organization.

In 1968, the Declaration “On the Oil Policy of OPEC Member Countries” was adopted, the content of which emphasized the inalienable right of the member countries of the organization to exercise permanent sovereignty over their natural resources in the interests of their national development.

During the 1970s, OPEC's influence on the world market not only grew, but it became the most important organization on whose policies crude oil prices began to depend. This state of affairs was facilitated, firstly, by the governments of states taking oil production on their territories under strict control, secondly, by the embargo on oil supplies by Arab countries in 1973, and thirdly, by the beginning of the Iranian revolution in 1979.

Countries that are part of OPEC

Last September, OPEC celebrated its anniversary. It was created in 1960. Today, OPEC countries occupy a leading position in the field of economic development.

general information

OPEC translated from English “OPEC” - “Organization of Petroleum Exporting Countries”. This international organization, created to control the volume of sales of crude oil and set the price for it.

By the time OPEC was created, there was a significant surplus of black gold in the oil market. The appearance of excess oil is explained by the rapid development of its vast deposits. The main supplier of oil was the Middle East. In the mid-50s of the twentieth century, the USSR entered the oil market. The volume of black gold production in our country has doubled.

The result of this was the emergence of serious competition in the market. Against this background, oil prices fell significantly. This contributed to the creation of OPEC. 55 years ago, this organization pursued the goal of maintaining an adequate level of oil prices.

OPEC countries meeting

Which states are included?

Today this organization includes 12 powers. These include states in the Middle East, Africa and Asia.

Russia is not a member of OPEC. Characterizing the powers that are part of this organization is not an easy matter. Only one thing can be said with confidence: just like 55 years ago, today the countries on the list are united by oil policy.

The initiator of the creation of this organization was Venezuela. Initially, the list included it, as well as the leading oil exporting states. After this, the list was replenished with Qatar and Indonesia. Libya was included in the list not during the time of Colonel Gaddafi, as many people think, but under King Idris, in 1962. The Emirates entered the list only in 1967.

In the period 1969-1973. the list was supplemented by such members as Algeria, Nigeria and Ecuador. In 1975, Gabon joined the list. In 2007, Angola joined the list. It is not known for certain whether OPEC will be added to the list in the near future.

Countries that are part of OPEC

What are countries?

The states that are part of this organization in 2018 produce only 44% of the world's oil production. But these countries have a huge influence on the black gold market. This is explained by the fact that the states that are part of this organization own 77% of all proven oil reserves throughout the world.

Saudi Arabia's economy is based on oil exports. Today, this black gold exporting state has 25% of oil reserves. Thanks to the export of black gold, the country receives 90% of its income. The GDP of this largest exporting state is 45 percent.

The second place in gold production is given to Iran. Today this state, a major oil exporter, occupies 5.5% of the world market. Kuwait should be considered an equally large exporter. The extraction of black gold brings the country 90% of its profits.

Oil production in Iran

Until 2011, Libya occupied an enviable place in oil production. Today the situation in this once richest state can be called not just difficult, but critical.

Iraq has the third largest oil reserves. The southern deposits of this country can produce up to 1.8 million black gold in just one day.

It can be concluded that most of the states that are members of OPEC are dependent on the profits that their oil industry brings. The only exception among these 12 states is Indonesia. This country also receives income from such industries as:

• tourism;
• timber extraction;
• gas sales;
• sale of other raw materials.

Indonesia as part of OPEC countries

For other powers that are part of OPEC, the percentage of dependence on the sale of black gold can range from 48 to 97 indicators.

When difficult times come, states with rich oil reserves have only one option - to diversify the economy as quickly as possible. This happens due to the development of new technologies that help save resources.

Organization policy

In addition to the goal of unifying and coordinating oil policy, the organization has an equally priority task - to stimulate economical and regular supplies of goods by members to those states that are consumers. One more the most important goal is to obtain a fair return on capital. This is relevant for those who actively invest in industry.

The main governing bodies of OPEC include:

The conference is the highest body of this organization. The highest position should be considered the position of Secretary General.

Meetings between energy ministers and black gold specialists take place twice a year. The main purpose of the meeting is to assess the state of the international oil market. Another priority is to develop a clear plan to stabilize the situation. The third purpose of the meeting is to forecast the situation.

Meeting of OPEC member countries

The organization’s forecast can be judged by the situation on the black gold market last year. Representatives of the member countries of this organization argued that prices would be maintained at $40-50 per barrel. At the same time, representatives of these states did not rule out that prices could rise to $60. This could only happen if China’s economy grew intensively.

Judging by the latest information, the plans of the management of this organization have no desire to reduce the amount of oil products produced. Also, OPEC has no plans to interfere in the activities of international markets. According to the organization's management, it is necessary to give the international market a chance to regulate itself.

Today, oil prices are close to a critical point. But the market situation is such that prices can either rapidly fall or rise.

Attempts to resolve the situation

Falling oil prices

After the start of another economic crisis that gripped the whole world, OPEC countries decided to meet in December 2015. Before this, 12 states met in June 2015, when there was a record drop in black gold futures. Then the size of the fall was catastrophic - up to 25 percent.

Judging by the forecast given by the organization’s experts at the end of 2015, the crisis will not affect only Qatar. In 2016, the price of Brent oil was about $60 per barrel.

Price policy

Today the situation for the OPEC participants themselves is as follows:

1. Iran - the price that ensures a deficit-free state budget is $87 (the share in the organization is 8.4%).
2. Iraq - $81 (share in the organization - 13%).
3. Kuwait - $67 (share in the organization - 8.7%).
4. Saudi Arabia - $106 (share in the organization - 32%).
5. UAE - $73 (share in the organization - 9.2%).
6. Venezuela - $125 (share in the organization - 7.8%).

According to some reports, at an informal meeting held in December 2015, Venezuela made a proposal to reduce current oil production to 5 percent. This information has not yet been confirmed.

Saudi Arabian Oil Minister Ali al-Naimi

The situation within the organization itself can be called critical. A year of significantly lower prices for black gold has hit the OPEC countries hard in the pocket. According to some estimates, the total income of member states could drop to $550 billion per year. The previous five-year plan showed much higher indicators. Then the annual income of these countries is 1 trillion. US dollars.

Extraordinary meeting

According to the Minister of Oil Industry of Iran, the existing problem can only be solved in the long term.

In February 2016, a decision was made to hold another meeting. The initiative was taken by six OPEC members:

The Russian Federation and Oman were also supposed to take part in the discussion. The objective of the extraordinary meeting was to conclude an agreement that would suit all participants of the 2016 meeting.

OPEC meeting in Vienna

One of the largest oil exporters, Saudi Arabia, did not hide the fact that it was not going to discuss lowering production with other OPEC members and “observers.” Iran also plans to significantly increase its production volumes. Today this state declares that its plans are to increase the volume to 500 thousand barrels/day.

On November 30, 2017, a new meeting of the member countries of the organization was held. Unfortunately, it was again impossible to accept the agreement. According to experts, the situation with oil prices in 2017 and 2018 will not stabilize.

Finally

OPEC headquarters building in Vienna

In 2018, members of the organization will adhere to the traditional course. Presumably, some restrictions are planned. But the hypothetical “sanctions” will most likely be symbolic. This is because countries will not comply with the proposed restrictions.

Which countries are part of OPEC?

OPEC headquarters.

OPEC countries - Algeria
Petroleum, crude oil and natural gas, manufactures

OPEC countries - Indonesia
Petroleum, tin, natural gas, nickel, timber, bauxite, copper, fertile soils, coal, gold, silver

OPEC countries - Iran
Petroleum, natural gas, carpets, iron and steel

OPEC countries - Iraq
Crude petroleum, oil commodities

OPEC countries - Kuwait
Petroleum, petroleum products, oil commodities

OPEC countries - Libya
Mineral fuels, crude oil

OPEC countries - Nigeria
Crude oil, petroleum products, oil commodities, heating oil

OPEC countries - Qatar
Crude oil, petroleum products, heating oil, oil commodities

OPEC countries - Saudi Arabia

OPEC countries - UAE
Crude oil and refined petroleum, oil commodities

OPEC countries - Venezuela
Mineral products (mainly petroleum and iron ore), petrochemicals

The Organization of the Petroleum Exporting Countries, abbreviated as OPEC, (English OPEC, The Organization of the Petroleum Exporting Countries) is an international intergovernmental organization created by oil-producing powers in order to stabilize oil prices. Members of this organization are countries whose economies largely depend on revenues from oil exports.

OPEC, as a permanent non-governmental organization, was created at a conference in Baghdad on September 10-14, 1960. Initially, the organization included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela (the initiator of the creation). These five founding countries were later joined by nine more: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973-1992) , 2007), Gabon (1975-1994), Angola (2007).
Currently, OPEC has 13 members, taking into account the changes in composition that occurred in 2007: the emergence of a new member of the organization - Angola and the return of Ecuador to the fold of the organization.
OPEC headquarters.

OPEC's headquarters were initially located in Geneva (Switzerland), then moved to Vienna (Austria) on September 1, 1965.

The goal of OPEC is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintaining stable oil prices, ensuring stable supplies of oil to consumers, and obtaining returns from investments in the oil industry.

The energy and oil ministers of OPEC member states meet twice a year to assess the international oil market and forecast its development for the future. At these meetings, decisions are made on the actions that need to be taken to stabilize the market. Decisions on changes in oil production volumes in accordance with changes in market demand are made at OPEC conferences.

OPEC member countries control about 2/3 of the world's oil reserves. They account for 40% of world production or half of world oil exports. Peak oil has not yet been passed only by OPEC countries and Russia (among the major exporters).

An abbreviation such as OPEC appears in the media every now and then. The goals of this organization are to regulate the black gold market. The structure is a fairly important player on the world stage. But is everything really so rosy? Some experts are of the opinion that it is OPEC members who control the situation on the “black gold” market. However, others believe that the organization is just a cover and a “puppet”, manipulating which more powerful powers only strengthen their power.

Well-Known Facts

It is the Organization of the Petroleum Exporting Countries that has the designation OPEC. A more accurate decoding of the name of this structure is English language sounds like Organization of Petroleum Exporting Countries. The essence of the structure’s activities is that it allows states where the fundamental sector of the economy is the extraction of black gold to influence the petroleum products market. That is, one of the main tasks of the organization is to establish the cost per barrel that is beneficial to major market players.

Members of the association

Currently, thirteen countries are members of OPEC. They have only one thing in common - the presence of deposits of flammable liquid. The main members of the organization are Iran, Iraq, Qatar, Venezuela and Saudi Arabia. The latter has the greatest authority and influence in the community. Among the Latin American powers, the representative of this structure, in addition to Venezuela, is Ecuador. The hottest continent included the following OPEC countries:

• Algeria;
• Nigeria;
• Angola;
• Libya.

Over time, a couple more Middle Eastern states, such as Kuwait and the United Arab Emirates, accepted membership. However, despite this geography, the countries belonging to OPEC established their headquarters in the capital of Austria - Vienna. Today, it is these oil exporters who control forty percent of the total market.

Historical background

The history of the creation of OPEC begins with a meeting of world leaders in the export of black gold. These were five states. The place of their meeting was the capital of one of the powers - Baghdad. What prompted the countries to unite can be explained very simply. One of the factors influencing this process is the phenomenon of decolonization. Just at the time when the process was actively developing, the countries decided to get together. This happened in September 1960.

The meeting discussed ways to escape the control of global corporations. At that time, many lands that were dependent on the metropolises began to be liberated. They could now set the direction of the political regime and the economy independently. Freedom of decision is what future OPEC members wanted to achieve. The goals of the nascent organization included stabilizing the cost of flammable substances and organizing its zone of influence in this market.

At that time, companies from the West occupied the most authoritative positions in the black gold market. These are Exxon, Chevron, Mobil. It was these largest corporations that proposed making the price per barrel an order of magnitude lower. They explained this by a combination of costs affecting oil rent. But since in those years the world did not particularly need oil, demand was lower than supply. The powers, from whose unification the Organization of Oil Exporting Countries would soon emerge, simply could not allow the implementation of this proposal.

Growing sphere of influence

The first step was to settle all the formalities and organize the work of the structure according to the model. The first headquarters of OPEC was located in the capital of Switzerland - Geneva. But five years after the establishment of the organization, the Secretariat was moved to Vienna, Austria. Over the next three years, provisions were developed and formed that reflected the rights of OPEC members. All these principles were combined into a Declaration, which was adopted at the meeting. The main point document is to provide a detailed explanation of the capabilities of states in terms of control over national natural resources. The organization gained wide publicity. This attracted new members to join the structure, including Qatar, Libya, Indonesia and the United Arab Emirates. Later, another major oil exporter, Algeria, became interested in the organization.

OPEC headquarters transferred the right to control production to the governments of the countries included in the structure. This was the right move and determined that in the seventies of the last century, OPEC had a very large influence on the world black gold market. This is confirmed by the fact that the price per barrel of this flammable substance directly depended on the decision of this organization.

In 1976, the work of OPEC acquired new tasks. The goals have received a new direction - this is an orientation towards international development. The latter decision led to the creation of the OPEC Fund. The organization's policies have taken on a somewhat updated look. This led to several more states wanting to join OPEC - African Nigeria, Gabon and Latin American Ecuador.

The eighties brought destabilization to the work of the organization. This is due to falling prices for black gold, despite the fact that before this it reached its maximum levels. This led to the fact that the share of OPEC member countries in the world market decreased. According to analysts, this process has led to a deterioration in the economic situation in these countries, since this sector relies on the sale of this fuel.

The nineties

In the early nineties, the situation became reversed. The cost per barrel has increased and the organization's share of the global segment has also expanded. But there were also reasons for this. These include:

• introduction of a new component of economic policy - quotas;
• new pricing methodology - “OPEC basket”.

However, even this improvement did not satisfy the members of the organization. According to their forecasts, the rise in prices for black gold should have been an order of magnitude higher. An obstacle to achieving what was expected was the unstable economic situation in the countries South-East Asia. The crisis lasted from ninety-eight to ninety-nine.

But at the same time, a significant advantage for states that exported oil was the development of the industrial sector. A huge number of new industries have appeared in the world, the resources of which were precisely this flammable substance. Intensive globalization processes and energy-intensive businesses also created conditions for rising prices per barrel of oil.

Some changes were also planned in the structure of the organization. Gabon and Ecuador, which suspended its work as part of the structure, was replaced by Russian Federation. Observer status for this largest exporter of black gold has become a significant plus for the authority of the organization.

New millennium

Constant economic fluctuations and crisis processes marked the new millennium for OPEC. Oil prices either fell to a minimum level or soared to sky-high figures. At first, the situation was quite stable, with smooth positive dynamics noted. In 2008, the organization renewed its composition, and Angola accepted membership. But in the same year, crisis factors sharply worsened the situation. This was manifested in the fact that the price per barrel of oil fell to the level of the year 2000.

Over the next two years, the price of black gold leveled off slightly. It has become as comfortable as possible for both exporters and buyers. In 2014, newly intensified crisis processes lowered the cost of flammable substances to a value that was zero. But, despite everything, OPEC steadfastly survives all the difficulties of the global economy and continues to influence the energy market.

Basic goals

Why was OPEC created? The organization's goals are to maintain and increase its current share in the global market. In addition, structure influences price setting. In general, these OPEC tasks were established when the organization was created and no significant changes in the direction of activity occurred. The same tasks can be called the mission of this association.

OPEC's current goals are:

• improvement of technical conditions to facilitate the extraction and transportation of black gold;
• expedient and effective investment of dividends received from the sale of oil.

The role of the organization in the global community

The structure is registered with the United Nations under the status of an intergovernmental organization. It was the UN that formed some of the functions of OPEC. The association has its say in resolving certain issues relating to the global economy, trade and society.

An annual meeting is held at which representatives from the governments of oil-exporting countries discuss the future direction of work and strategy for operating in the global market.

Now the states that are members of the organization are engaged in the production of sixty percent of the total volume of oil. According to analysts' calculations, this is not the maximum level they can reach. Only Venezuela is fully developing its storage facilities and selling its reserves. However, the association still cannot reach a consensus on this matter. Some believe that it is necessary to extract the maximum possible in order to prevent the United States from increasing its influence in the global energy market. According to others, an increase in production volumes only leads to an increase in supply. In this case, a decrease in demand will entail a decrease in prices for this combustible substance.

Organization structure

The main person of the organization is general secretary OPEC Mohammed Barkindo. This person is responsible for everything that the Conference of States Parties decides. At the same time, the Conference, convened twice a year, is the leading governing body. During their meetings, members of the association deal with the following issues:

• consideration of a new composition of participants - granting membership to any country is discussed jointly;
• personnel changes;
• financial aspects - budget development.

The development of the above problems is carried out by a specialized body called the Board of Governors. In addition to it, departments occupy their place in the structure of the organization, each of which studies a specific range of topics.

An important concept in organizing OPEC’s work is also the “price basket”. It is this definition that plays a key role in pricing policy. The meaning of the “basket” is very simple - it is the average value between the cost of flammable substances of different brands. The grade of oil is determined depending on the producing country and grade. Fuel is divided into “light” and “heavy”.

Quotas are also a lever of influence on the market. What are they? These are restrictions on the production of black gold per day. For example, if quotas are reduced, shortages arise. Demand begins to exceed supply. Accordingly, thanks to this, the price of a flammable substance can be increased.

Prospects for further development

The number of countries in OPEC does not mean that this composition is final. The abbreviation fully explains the goals and objectives of the organization. Many other states that are awaiting approval for membership want to follow the same policy.

Modern analysts believe that soon it will not be only oil exporting countries that will dictate terms on the energy market. Most likely, the direction in the future will be set by importers of black gold.

How comfortable the import conditions will be will determine the development of national economies. That is, if the industrial sector is developed in the states, this will cause stabilization of prices for black gold. But in the event that production requires excessive fuel consumption, there will be a gradual transition to alternative energy sources. Some businesses may simply be liquidated. This will cause prices per barrel of oil to decline. Thus, we can conclude that the most reasonable solution is to find a compromise between protecting one’s own national interests and those of oil exporting countries.

Other experts consider the situation that there will be no substitute product for a given flammable substance. This will significantly strengthen the influence of exporting states on the world stage. Thus, even despite the crisis and inflationary processes, the decline in prices will not be particularly significant. Despite the fact that some fields are developed quite slowly, demand will always exceed supply. This will also help these powers enjoy greater authority in the political sphere.

Problematic points

The main problem of the organization is the difference in the position of the participating countries. For example, Saudi Arabia (OPEC) has a low population density and at the same time huge deposits of “black gold”. Another feature of the country’s economy is investment from other countries. Saudi Arabia has established partnerships with Western companies. In contrast, there are countries that have enough a large number of residents, but at the same time a low level of economic development. And since any energy-related project requires large investments, the state is constantly in debt.

Another problem is that the profit received from the sale of black gold must be able to be distributed correctly. In the first years after the formation of OPEC, members of the organization spent money left and right, boasting of their wealth. Now this is considered bad manners, so funds have become spent more wisely.

Another issue that some countries are struggling with and which is one of the main challenges at the moment is technical backwardness. In some states there are still remnants of the feudal system. Industrialization should have a great impact not only on the development of the energy industry, but also on the quality of life of people. Many enterprises in this area lack qualified workers.

But the main feature of all OPEC member countries, as well as the problem, is their dependence on black gold production.

An agreement to reduce oil production was reached by OPEC countries on November 30, 2016 in Vienna. The alliance agreed to reduce oil production by 1.2 million barrels per day to 32.5 million barrels. On December 10, 11 non-OPEC countries, including Kazakhstan, joined this initiative and agreed to reduce their production by a total of 558 thousand barrels per day. This was done to restore the price of oil and the balance of supply and demand in the market. What is OPEC, how does it affect world oil prices and why these agreements are needed - in the material Tengrinews.kz.

1.What is OPEC and why was it created?

The name OPEC comes from English abbreviation Organization of Petroleum Exporting (Organization of Petroleum Exporting Countries). This is an international and interstate organization that was created by a number of the largest oil-producing countries to control the oil market and oil prices. In fact, OPEC is an oil cartel, but in the last few years its role as an oil cartel and even as a regulator of the oil market has been called into question. The OPEC cartel includes Algeria, Angola, Venezuela, Gabon, Iran, Iraq, Kuwait, Qatar, Libya, United Arab Emirates, Nigeria, Saudi Arabia, Equatorial Guinea and Ecuador. OPEC was created in 1960 at the initiative of Venezuela. It was supported by four countries - the leaders of the oil market in terms of oil reserves and production - Saudi Arabia, Iran, Iraq and Kuwait. Later, a number of other countries joined OPEC. Today, OPEC includes countries that control about 2/3 of the world's oil reserves and almost 35 percent of world production, or half of the world's oil exports.

2 How does OPEC influence world oil prices?

OPEC influences the oil market by distributing oil production quotas in each country among member countries and monitoring their implementation. Oil prices react to OPEC messages, since most often they contain statements about events in the oil market that will occur in the near future or in the medium term, and this is a reference point for traders in the oil futures market, where the exchange price of black gold is determined.

3 How have oil prices changed since the creation of OPEC?

1973: oil price per barrel - $3.3

After the Yom Kippur War began between Egypt, Syria and Israel, the Arab members of OPEC (except Iraq) announced a production cut of 5 percent and an increase in oil prices by 70 percent. Then all OPEC countries declared an embargo on oil supplies to countries that supported Israel. As a result of these actions, oil prices jumped from $3 to $12 per barrel. Oil was in the $12 to $15 per barrel range until the late 1970s.

1978: oil price per barrel - $14

The revolution in Iran led to a complete stop in oil imports from this country. The markets immediately reacted to these actions. The price per barrel increased two and a half times by the following year.

1980: oil price per barrel - $36.8

The Iran-Iraq War affected the reduction of oil supplies from Iran and the stoppage of supplies from Iraq. At this time, an economic crisis begins in the West.

From 1982 to 1983: oil price per barrel - $30

From April 1982 to March 1983, a total production limit of 17 million 350 thousand barrels per day was first established. Due to the increasing glut of oil, competition between producers increased. In this regard, they were forced to enter the spot market and sell oil at free prices, which was on average 10 percent lower than the OPEC price. During this period, trading in the world's first futures for WTI oil began in New York.

1986: oil price per barrel -$14.4

OPEC set the lowest quota in the history of the organization - 14.8 million barrels per day. This coincided with a record drop in oil prices from $30 to $15 per barrel.

1990: oil price per barrel - $23.7

After Iraq invaded Kuwait, the West imposed an embargo against these countries. Prices soared to $30 per barrel, then fell slightly.

1998: oil price per barrel - $12.7

OPEC increased the quota to 27 million barrels, after which oil prices fell by half.

2005: oil price per barrel - $54.2

After September 11, 2001, the price of oil began to decline - from $29.12 per barrel to $16. In this regard, in November 2001, OPEC, at a meeting in Cairo, agreed to reduce production from 23.2 to 21.7 million barrels per day. By May 2002, prices had returned to their previous levels.

From 2005 to 2008, against the backdrop of rising oil prices, OPEC gradually increased the total quota from 25.5 to 29.2 million barrels per day. At the end of 2007, members of the organization announced possible refusal from the dollar in calculations, the cost of Brent oil jumped by 2.7 percent - from 91.59 to 94.13 dollars.

​2008: oil price per barrel - $97.2

On July 3, Brent oil reached its absolute maximum price - $148.4 per barrel. An economic crisis began in the United States and then in the world.

2009: oil price per barrel - $61.7

OPEC reduces quota to 24.8 million barrels per day. This, as well as rising consumption in China, will gradually stabilize the price of oil.

2011: oil price per barrel - $111.3

The Arab Spring has begun. Supplies from Libya fell three times. The average annual oil price exceeded $100 per barrel for the first time in history. ​

2014: oil price per barrel - $99

Rising production in the US and slowing consumption in China led to a fall in prices. In response, OPEC launched a “price war,” refusing to reduce production quotas and increasing its market share.

2015: oil price per barrel - $52.3

Saudi Arabia produced 10.17 million barrels per day (the highest in history), which had virtually no impact on US production growth. OPEC abandoned its oil production target, effectively allowing member countries to produce oil without restrictions. Prices fell to 2004 levels.

2016: oil price per barrel - $52.3

OPEC countries negotiated throughout the year to freeze oil production, but a final agreement was reached only on November 30.

4 What are the main problems OPEC has?

The main problem is discipline within the cartel, which has deteriorated greatly due to geopolitical reasons in the last few years. If earlier this organization, when making, for example, a decision to reduce oil production, acted as a single cartel, then during the recent global crisis it turned out that a number of countries no longer consider OPEC decisions to be binding. In particular, these are Iran (due to the US embargo on the import of Iranian oil), Libya (due to civil war in the country) and Nigeria, which, due to internal political and economic reasons, is not always able to follow the established quotas.

Another problem is competition and the growing geopolitical influence of independent (non-OPEC) oil producers. First of all, this is Russia. In addition, the United States has now become a major oil producer and exporter. Accordingly, increasing the supply of oil in the world with rather weak demand requires coordinated actions with independent producers. If, as it turned out, it was not so difficult to agree with Russia and a number of other producers on a joint reduction in oil production, then it will be much more difficult to negotiate with scattered shale oil producers in the United States. Therefore, for the oil market, OPEC decisions today are no longer such a significant guideline as they were back in 2009-2010.

Details Organizations

(transliteration of the English abbreviation OPEC - The Organization of Petroleum Exporting Countries, literally translated - Organization of Petroleum Exporting Countries) is an international intergovernmental organization of oil-producing countries created to stabilize oil prices.

Organization of Petroleum Exporting Countries

Date of foundation

Start date of activity

Headquarters location

Vienna, Austria

Secretary General

Mohammad Sanusi Barkindo

Official site

OPEC's goal is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintaining the stability of world oil prices, ensuring uninterrupted supplies of raw materials to consumers and obtaining returns from investments in the oil industry.

OPEC's influence on the oil market

According to estimates by the International Energy Agency (IEA), OPEC countries account for more than 40% of world oil production and about 60% of the total volume of oil traded on the international market.

The price of oil is dictated primarily by the balance of supply and demand. And supply, as can be seen from the statistics above, is determined by the actions of OPEC. It is for this reason that the Organization of Petroleum Exporting Countries plays an extremely important role in the oil industry.

Even though many experts have recently seen a decrease in OPEC's influence on the oil market, oil prices still largely depend on the organization's actions. History knows many examples when instability in the market was caused by simple rumors related to the actions of an organization, or a statement by one of the members of the OPEC delegation.

OPEC's main tool for regulating oil prices is the introduction of so-called production quotas among the organization's members.

OPEC quotas

OPEC quota– the maximum volume of oil production established at a general meeting both for the entire organization as a whole and for each individual OPEC member country.

Reduction general level cartel production by distributing oil production from OPEC countries quite logically leads to an increase in prices for black gold. When quotas were abolished (this has happened in the history of the oil industry), oil prices dropped significantly.

The system of setting quotas or “production ceilings” was prescribed in the organization’s Charter, approved in 1961. However, this method was first used only at the 63rd extraordinary OPEC conference on March 19-20, 1982.

Organization of Petroleum Exporting Countries in Figures

1242.2 billion barrels

Total proven oil reserves of OPEC member countries

Share of reserves of member countries of the organization from all world oil reserves

39,338 thousand barrels per day

Volume of oil production by OPEC countries

OPEC's share in world oil production

Share of global OPEC exports

BP Energy Review 2018 data.

*Data from the International Energy Agency for 2018.

OPEC countries

The organization was formed during an industry conference in Baghdad on September 10-14, 1960, on the initiative of five developing oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

Subsequently, countries whose economies are directly dependent on oil production and export began to join the organization.

Despite the fact that OPEC includes countries from different parts of the world, historically Saudi Arabia and other Middle Eastern states have the greatest influence within the cartel.

This preponderance of influence is due not only to the fact that some of these countries are the founders of the organization, but also to the huge oil reserves concentrated in the Arabian Peninsula and Saudi Arabia in particular, the high level of production, as well as the presence of the most modern technologies for extracting this mineral in surface. For comparison, in 2018, Saudi Arabia produced an average of 10.5 million barrels per day, and the country with the closest production level among the cartel participants, Iran, produced 4.5 million barrels per day.

As of the end of 2019, the organization includes 14 countries. Below is a table with a list of states that are part of OPEC, in the order of their entry into the organization.

Years of Membership

Oil and condensate production, million barrels

Proven reserves, billion tons

Near East

Near East

Near East

Saudi Arabia

Near East

Venezuela

South America

North Africa

United Arab Emirates

Near East

North Africa

West Africa

South America

1973 - 1992,
2007 -

Central Africa

1975 - 1995,
2016 -

South Africa

Equatorial Guinea

Central Africa

Central Africa

*Ecuador was not a member of the organization from December 1992 to October 2007. In 2019, the country announced that it would leave OPEC on January 1, 2020.

**Gabon suspended membership in the organization from January 1995 to July 2016.

In addition, OPEC included:

Indonesia (from 1962 to 2009, and from January 2016 to November 30, 2016);
- Qatar (from 1961 to December 31, 2018).

To approve the admission of a new member to the organization, the consent of three quarters of the existing members, including all five founders of OPEC, is required. Some countries wait several years for approval of membership in the organization. For example, Sudan submitted an official application in October 2015, but is currently (end of 2019) still not a member of the organization.

Each cartel member is required to pay an annual membership fee, the amount of which is set at an OPEC meeting. The average contribution is $2 million.

As mentioned above, there have been several points in the organization's history when countries terminated or temporarily suspended membership. This was mainly due to the disagreement of countries with the production quotas introduced by the organization and the reluctance to pay membership fees.

Organization structure

OPEC meetings

The highest governing body of the Organization of Petroleum Exporting Countries is the Conference of Participating Countries, or as it is more often called, the OPEC meeting or meeting.

OPEC meets twice a year, and if necessary, extraordinary sessions are organized. The meeting place, in most cases, is the headquarters of the organization, which has been located in Vienna since 1965. From each country, a delegation is present at the meeting, headed, as a rule, by the ministers of oil or energy of the corresponding country.

President of the Conference

The meetings are presided over by the President of the Conference (OPEC President), who is elected every year. Since 1978, the position of deputy president has also been introduced.

Each member country of the organization appoints a special representative, from whom the Board of Governors is formed. The composition of the council is approved at an OPEC meeting, as is its chairman, who is elected for a term of three years. The functions of the council are to manage the organization, convene Conferences and draw up the annual budget.

Secretariat

The executive body of the Organization of Petroleum Exporting Countries is the Secretariat, headed by Secretary General. The Secretariat is responsible for the implementation of all resolutions adopted by the Conference and the Governing Council. In addition, this body conducts research, the results of which are key factors in the decision-making process.

The OPEC Secretariat includes the Office of the Secretary General, the Legal Division, the Research Division and the Support Services Division.

Informal OPEC meetings

In addition to official meetings, informal OPEC meetings are organized. At them, members of the organization discuss issues in a consultative – preliminary mode, and later at an official meeting they are guided by the results of such negotiations.

OPEC observers

Since the 1980s, representatives of other oil-producing countries outside the organization have been present at OPEC meetings as observers. In particular, many meetings were attended by representatives of countries such as Egypt, Mexico, Norway, Oman, and Russia.

This practice serves as an informal mechanism for coordinating the policies of non-OPEC and OPEC countries.

Russia has been an OPEC observer country since 1998, and since then has regularly participated in extraordinary sessions of the organization’s ministerial conferences in this status. In 2015, Russia was offered to join the main structure of the organization, but representatives of the Russian Federation decided to leave observer status.

Since December 2005, a formal energy dialogue between Russia and OPEC has been established, within the framework of which it is planned to organize annual meetings of the Minister of Energy of the Russian Federation and the Secretary General of the organization alternately in Moscow and Vienna, as well as holding expert meetings on the development of the oil market.

It is worth noting that Russia is providing significant influence to OPEC policy. In particular, members of the organization are afraid of a possible increase in Russian production volumes, and therefore refuse to reduce production unless Russia does the same.

OPEC+ (Vienna Group)

In 2017, a number of non-OPEC oil-producing countries agreed to participate in oil production cuts, thus strengthening coordination in the global market. The group included 10 countries: Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, Sudan and South Sudan.

Thus, together with the organization’s participants, 24 countries support production reduction. This general group and the agreement itself between 24 countries is called OPEC+ or in some, mainly foreign sources, the Vienna Group.

OPEC reports

The Secretariat of the Organization of the Petroleum Exporting Countries produces several periodic publications that contain information about its activities, statistics on the main indicators of the global oil industry in general and cartel participants in particular.

The Monthly Oil Market Report (MOMR) analyzes the most important issues facing the global oil community. Along with supply and demand analysis, the report assesses the dynamics of oil prices, commodity and commodity markets, refining operations, inventories and tanker market activity.
- The OPEC Bulletin - OPEC's monthly newsletter is the organization's leading publication, which contains feature articles on the activities and events of the Secretariat, as well as news about member countries.
- The World Oil Outlook (WOO) – An annual summary of the Organization of the Petroleum Exporting Countries' medium- and long-term forecasts for the global oil market. When developing a report, various scenarios and analytical models, bringing together many factors and issues that may affect the oil industry as a whole and the organization itself in the coming years.
- The Annual Statistical Bulletin (ASB) - The annual statistical bulletin - combines statistical data from all member countries of the organization and contains about 100 pages with tables, charts and graphs detailing world oil and gas reserves, oil production and production of petroleum products, export data and transportation, as well as other economic indicators.

In addition, it is worth noting such publications as the Annual Report, the quarterly OPEC Energy Review and the Long-Term Strategy published every five years.

Also on the organization’s website you can find “Frequently Asked Questions” and a brochure “Who Gets What from Oil?”

OPEC oil basket

To more effectively calculate the cost of oil produced in member countries of the organization, the so-called “OPEC oil basket” was introduced - a certain set of types of oil produced in these countries. The price of this basket is calculated as the arithmetic average of the cost of the varieties included in it.

Prerequisites for creation and history of the organization

Post-World War II period

In 1949, Venezuela and Iran made the first attempts to create an organization, inviting Iraq, Kuwait and Saudi Arabia to establish links between oil-exporting countries. At that time, production was just beginning at some of the world's largest fields in the Middle East.

After World War II, the United States was the largest producer and at the same time the largest consumer of oil. The world market was dominated by a group of seven multinational oil companies known as the "Seven Sisters", five of which were based in the United States and were formed as a result of the collapse of the Rockefeller Standard Oil monopoly:

Exxon
Royal Dutch Shell
Texaco
Chevron
Mobile
Gulf Oil
British Petroleum

Thus, the desire of oil exporting countries to unite was dictated by the need to create a counterbalance to the economic and political influence of the transnational group “Seven Sisters”.

1959 – 1960 Anger of exporting countries

In February 1959, as supply options expanded, the Seven Sisters multinationals unilaterally reduced the price of Venezuelan and Middle Eastern crude oil by 10%.

A few weeks later, the first Arab Petroleum League Congress took place in Cairo, Egypt. Arab states. The congress was attended by representatives of the two largest oil-producing countries after the USA and the USSR - Abdullah Takiri from Saudi Arabia and Juan Pablo Perez Alfons from Venezuela. Both ministers expressed outrage at the decline in commodity prices, and instructed their colleagues to conclude the Maadi Pact, or Gentlemen's Agreement, calling for the creation by exporting countries of an "oil advisory commission" to which multinational companies should submit plans for changes in commodity prices.

There was hostility towards the West and protest against the “Seven Sisters”, who at that time controlled all oil operations in exporting countries and had enormous political influence.

In August 1960, ignoring warnings, multinational companies again announced cuts in Middle Eastern oil prices.

1960 – 1975 Founding of OPEC. The first years.

On September 10 - 14, 1960, on the initiative of Abdullah Tariqi (Saudi Arabia), Perez Alfonso (Venezuela) and Iraqi Prime Minister Abd al-Karim Qassim, the Baghdad Conference was organized. At the meeting, representatives from Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met to discuss rising prices for oil produced by their countries, as well as policies to respond to the actions of multinational companies.

As a result, despite strong opposition from the United States, the above five countries formed the Organization of Petroleum Exporting Countries (OPEC), the purpose of which was to ensure best price for oil, regardless of large oil corporations.

Initially, Middle Eastern member countries called for the organization's headquarters to be located in Baghdad or Beirut. However, Venezuela advocated a neutral location, which served as the location of the headquarters in Geneva (Switzerland).

In 1965, after Switzerland refused to renew diplomatic privileges, OPEC headquarters were moved to Vienna (Austria).

During 1961 – 1975, the five founding countries were joined by: Qatar, Indonesia, Libya, United Arab Emirates (initially only the Emirate of Abu Dhabi), Algeria, Nigeria, Ecuador and Gabon. By the early 1970s, OPEC member countries accounted for more than half of world oil production.

On April 2, 1971, the Organization of Petroleum Exporting Countries signed a oil companies, doing business in the Mediterranean region, the Tripoli Agreement, which resulted in higher oil prices and increased profits for producing countries.

1973 – 1974 Oil embargo.

In October 1973, OAPEC (Organization of Arab Petroleum Exporting Countries, consisting of the Arab majority OPEC, plus Egypt and Syria) announced significant production cuts and an oil embargo aimed at the United States of America and other industrialized countries supporting Israel in the Yom Kippur War. day.

It is worth noting that in 1967, an embargo against the United States was also attempted in response to the Six Day War, but the measure was ineffective. The 1973 embargo, on the other hand, led to a sharp increase in oil prices from $3 to $12 per barrel, which significantly affected the world economy. The world experienced a global economic downturn, rising unemployment and inflation, declining stock and bond prices, shifts in the trade balance, etc. Even after the end of the embargo in March 1974, prices continued to rise.

Oil embargo 1973 – 1974 served as a catalyst for the founding of the International Energy Agency, and also prompted many industrialized countries to create national oil reserves.

Thus, OPEC demonstrated its influence in the economic and political arena.

1975 – 1980 Special Fund, OFID

International assistance activities of the Organization of the Petroleum Exporting Countries began long before the oil price spike of 1973–1974. For example, the Kuwait Fund for Arab Economic Development has been operating since 1961.

After 1973, some Arab countries became the largest providers of foreign aid, and OPEC added oil supplies to its goals to promote socioeconomic growth in poorer countries. The OPEC Special Fund was created in Algeria in March 1975 and officially established in January of the following year.

In May 1980, the Fund reclassified itself as an official international development agency and was renamed the OPEC Fund for International Development (OPEC) with permanent observer status at the United Nations.

1975 Hostage taking.

On December 21, 1975, several oil ministers, including the representative of Saudi Arabia and Iran, were taken hostage at the OPEC Conference in Vienna. The attack, which killed three ministers, was carried out by a six-man team led by Venezuelan militant "Carlos the Jackal", who declared their goal to be the liberation of Palestine. Carlos planned to seize the conference by force and ransom all eleven oil ministers present, with the exception of Ahmed Zaki Yamani and Jamshid Amuzegar (representatives of Saudi Arabia and Iran), who were to be executed.

Carlos marked 42 of the 63 hostages on the bus and headed to Tripoli with a stop in Algiers. He initially planned to fly from Tripoli to Baghdad, where Yamani and Amuzegar were to be killed. 30 non-Arab hostages were released in Algeria, and several more in Tripoli. After that, 10 people remained hostage. Carlos had a telephone conversation with Algerian President Houari Boumediene, who informed Carlos that the death of the oil ministers would lead to an attack on the plane.

Boumediene must also have offered Carlos asylum and perhaps financial compensation for failing to complete his assignment. Carlos expressed regret that he could not kill Yamani and Amuzegar, after which he and his accomplices abandoned the plane and fled.

Some time after the attack, Carlos' associates reported that the operation was commanded by Wadi Haddad, founder of the Popular Front for the Liberation of Palestine. They also claimed that the idea and funding came from an Arab president, widely believed to be Muammar Gaddafi of Libya (the country is part of OPEC). Other militants, Bassam Abu Sharif and Klein, claimed that Carlos received and kept a ransom of between US$20 and US$50 million from the "Arab President". Carlos claimed that Saudi Arabia paid the ransom on behalf of Iran, but that the money was "diverted in transit and lost in the revolution."

Carlos was only caught in 1994 and is serving a life sentence for at least 16 other murders.

Oil crisis 1979 - 1980, oil surplus 1980

In response to the wave of nationalization of oil reserves and high oil prices in the 1970s. industrialized countries have taken a number of steps to reduce their dependence on OPEC. Especially after prices set new records, approaching $40 per barrel in 1979-1980, when the Iranian revolution and the Iran-Iraq war disrupted regional stability and oil supplies. In particular, the transition of energy companies to coal began, natural gas and nuclear energy, and governments began devoting multibillion-dollar budgets to research programs to find alternatives to oil. Private companies have begun developing large oil fields in non-OPEC countries in areas such as Siberia, Alaska, the North Sea and the Gulf of Mexico.

By 1986, global oil demand had fallen by 5 million barrels per day, non-member production had increased substantially, and OPEC's market share had fallen from about 50% in 1979 to less than 30% in 1985. As a result, the price of oil fell for six years, culminating in the price halving in 1986.

To combat declining oil revenues, Saudi Arabia in 1982 demanded that OPEC verify compliance with oil production quotas from cartel member countries. When it turned out that other countries were not complying with the requirement, Saudi Arabia cut its own production from 10 million barrels per day in 1979-1981. to 3.3 million barrels per day in 1985. However, when even this measure failed to stop prices from falling, Saudi Arabia changed strategy and flooded the market with cheap oil. As a result, oil prices have fallen below $10 per barrel, and producers with higher production costs are suffering losses. OPEC member countries that did not comply with the previous agreement began to limit production in order to support prices.

1990 – 2003 Overproduction and supply disruptions.

Before the invasion of Kuwait in August 1990, Iraqi President Saddam Hussein pushed the Organization of the Petroleum Exporting Countries to stop overproduction and raise oil prices to help financial assistance OPEC countries and speed up recovery from the 1980-1988 wars in Iran. These two Iraq wars against other OPEC members seriously shook the organization's cohesion, and oil prices began to decline rapidly as a result of supply disruptions. Even the September 2001 al-Qaeda attack on New York skyscrapers and the March 2003 US invasion of Iraq had less of a short-term negative impact on oil prices, as OPEC cooperation resumed during this period.

In the 1990s, two countries left OPEC, having joined in the mid-70s. In 1992, Ecuador withdrew because it refused to pay the annual membership fee of $2 million and also believed that it needed to produce more oil than prescribed by quota restrictions (in 2007 the country rejoined the organization). Gabon suspended membership in January 1995 (also returned in July 2016).

It is worth noting that oil production volumes in Iraq, despite the country’s constant membership in the organization since its founding, were not subject to quota regulation in the period from 1998 to 2016 due to political difficulties.

The decline in demand caused by the Asian financial crisis of 1997–1998 led to a decline in oil prices to 1986 levels. After prices fell to around $10 a barrel, diplomatic negotiations led to production cuts from OPEC countries, Mexico and Norway. After prices fell again in November 2001, OPEC members Norway, Mexico, Russia, Oman and Angola agreed to cut production for 6 months from January 1, 2002. In particular, OPEC reduced production by 1.5 million barrels per day.

In June 2003, the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries held their first joint seminar on energy issues. Since then, meetings of the two organizations have been held on a regular basis.

2003 – 2011 Volatility of the oil market.

In 2003 – 2008 In Iraq, occupied by the United States, there were massive uprisings and sabotages. This has coincided with soaring demand for oil from China and commodity investors, periodic attacks on the Nigerian oil industry and dwindling reserve capacity to protect against potential shortages.

This combination of events caused oil prices to skyrocket to levels far above those previously projected by the organization. Price volatility reached its extreme in 2008, when WTI crude oil rose to a record $147 a barrel in July before falling to $32 a barrel in December. It was the time of the greatest global economic downturn since World War II.

The organization's annual oil export revenue also set a new record in 2008. It was valued at about $1 trillion, and reached similar annual levels in 2011-2014 before falling again. By the start of the 2011 Libyan Civil War and the Arab Spring, OPEC began issuing clear statements to counter "excessive speculation" in oil futures markets, blaming financial speculators for driving up volatility beyond market fundamentals.

In May 2008, Indonesia announced its withdrawal from the organization upon expiration of its membership, explaining its decision by the transition to oil imports and the inability to fulfill the prescribed production quota (in 2016, Indonesia was again part of the organization for a period of several months).

2008 Dispute over production volumes.

The different economic needs of OPEC member countries often lead to internal debates over production quotas. Poorer members pushed for production cuts from other countries in order to raise the price of oil and therefore their own incomes. The proposals run counter to Saudi Arabia's stated long-term strategy of partnering with global economic powers to ensure a stable supply of oil to fuel economic growth. Part of the basis for this policy is Saudi Arabia's concern that excessively expensive oil or unreliable supplies will prompt industrial countries to conserve energy and develop alternative fuels, reducing global oil demand and ultimately leaving reserves in the ground. Saudi Arabia's Oil Minister Yamani commented in 1973 this question in the following words: " Stone Age ended not because we ran out of stones.”

On September 10, 2008, with oil prices still hovering around $100 a barrel, a production dispute arose at an OPEC meeting. Saudi officials then reportedly walked out of a negotiating session in which other members voted to cut OPEC production. Although Saudi delegates officially approved the new quotas, they anonymously said they would not comply with them. The New York Times quotes one of the delegates as saying: “Saudi Arabia will meet market demand. We will see what the market requires and will not leave the buyer without oil. The policy hasn't changed." Within months, oil prices dropped to $30 and did not return to $100 until the Libyan civil war in 2011.

2014–2017 Excess of oil.

During 2014–2015 OPEC member countries have consistently exceeded their production ceilings. At this time, economic growth was slowing in China, and oil production in the United States almost doubled compared to 2008 and approached the levels of world leaders in production volumes - Saudi Arabia and Russia. This leap occurred due to the significant improvement and spread of technology for developing shale oil through “fracking.” These events, in turn, led to lower US oil import requirements (a move closer to energy independence), record levels of global oil reserves, and a fall in oil prices that continued into early 2016.

Despite the global oil glut, on November 27, 2014 in Vienna, Saudi Arabia's Oil Minister Ali al-Naimi blocked calls from poorer OPEC members for production cuts to support prices. Naimi argued that the oil market should be left uninterrupted to allow it to self-balance at lower prices. According to his arguments, OPEC's market share should recover due to the fact that expensive shale oil production in the United States will not be profitable at such low prices.

A year later, at the time of the OPEC meeting in Vienna on December 4, 2015, the organization had exceeded its production ceiling for 18 consecutive months. At the same time, oil production in the United States decreased only slightly compared to its peak. Global markets appeared to be oversupplied by at least 2 million barrels a day, even as the war in Libya cut the country's output by 1 million barrels a day. Oil producers were forced to make major adjustments to maintain prices at $40. Indonesia briefly rejoined the export body, Iraqi production increased after years of turmoil, Iran was poised to restore production if international sanctions were lifted, hundreds of world leaders pledged to limit carbon emissions from fossil fuels as part of the Paris climate agreement, and solar technology became increasingly competitive and widespread. In light of all these market pressures, the organization decided to defer the ineffective production cap until the next ministerial conference in June 2016. By January 20, 2016, the price of the OPEC Oil Basket had fallen to $22.48 per barrel, less than one-fourth of its high since June 2014 ($110.48), and less than one-sixth of its record reached in July 2008 ($140. 73).

In 2016, the oil glut was partially offset by significant production cuts in the US, Canada, Libya, Nigeria and China, and the basket price gradually rose to $40 per barrel. The organization regained a modest percentage of market share, maintained the status quo at its June conference, and approved "prices at levels suitable for both producers and consumers," although many producers were still experiencing severe economic difficulties.

2017–2019 Reduction in production.

In November 2016, OPEC members, tired of declining profits and dwindling financial reserves, finally signed an agreement to cut production and introduce quotas (Libya and Nigeria, devastated by the unrest, were exempt from the agreement). Along with this, several countries outside the organization, including Russia, supported the Organization of Petroleum Exporting Countries in its decision to limit production. This consolidation is called the OPEC+ agreement.

In 2016, Indonesia, instead of agreeing to the requested 5% production cut, again announced a temporary suspension of membership in the organization.

During 2017, oil prices fluctuated around $50 per barrel, and in May 2017, OPEC countries decided to extend production restrictions until March 2018. Renowned oil analyst Daniel Yergin described the relationship between OPEC and shale producers as "a mutual existence where both sides learn to live with prices that are lower than they would like."

In December 2017, Russia and OPEC agreed to extend production cuts of 1.8 million barrels per day until the end of 2018.

On January 1, 2019, Qatar left the organization. According to the New York Times, this is a strategic response to the ongoing boycott of Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt.

On June 29, 2019, Russia again agreed with Saudi Arabia to extend the initial 2018 production cuts by six to nine months.

In October 2019, Ecuador announced its withdrawal from the organization effective January 1, 2020 due to financial problems.

In December 2019, OPEC and Russia agreed to one of the largest production cuts to date. The agreement will last for the first three months of 2020 and is aimed at preventing an oversupply of oil on the market.

The Organization of the Petroleum Exporting Countries, abbreviated as OPEC, (English OPEC, The Organization of the Petroleum Exporting Countries) is a cartel created by oil-producing powers to stabilize oil prices. Members of this organization are countries whose economies largely depend on revenues from oil exports. The main goal of the organization is control over world oil prices

OPEC was formed at an international conference on September 10-14, 1960 in Baghdad (Iraq). Initially, this organization included five countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Eight more new members were admitted between 1960 and 1975: Qatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Gabon. In December 1992, Ecuador left OPEC, and in January 1995, Gabon was expelled from it.

OPEC, as a permanent non-governmental organization, was created at a conference in Baghdad (Iraq) on September 10-14, 1960. Initially, the organization included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These five founding countries were later joined by nine more: Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973-- 1992), Gabon (1975--1994), Angola (2007).

The OPEC Charter was approved at the 2nd conference in Caracas on January 15-21, 1961. In 1965, the charter was completely revised. Later, numerous changes and additions were also made to it.

OPEC was established after the Seven Sisters, a cartel that united British Petroleum, Chevron, Exxon, Gulf, Mobil, Royal Dutch/Shell and Texaco and controlled the refining of crude oil and the sale of petroleum products throughout the world, unilaterally reduced purchase prices for oil, based on which they paid taxes and interest for the right to develop natural resources to oil-producing countries.

The initiator of the creation of the organization was Venezuela, the most developed of the oil-producing countries, which for a long time was subject to exploitation by oil monopolies. Understanding of the need to coordinate efforts against oil monopolies was also brewing in the Middle East. This was evidenced by the Iraqi-Saudi agreement on harmonizing Oil Policy in 1953 and the meeting of the Arab League in 1959, dedicated to oil problems, which was attended by representatives of Iran and Venezuela.

The immediate impetus that led to the creation of the Petroleum Exporters Association was another reduction in reference prices in 1959 by the International Petroleum Cartel, as well as the imposition of restrictions on oil imports into the United States.

The headquarters of OPEC was initially located in Geneva (Switzerland), then on September 1, 1965 it moved to Vienna (Austria).

The main goals of creating the Organization are:

• 1) coordination and unification of the oil policy of the member states;
• 2) determining the most effective individual and collective means of protecting their interests;
• 3) ensuring price stability on world oil markets;
• 4) attention to the interests of oil-producing countries and the need to provide: oil exporter Russia energy supply
• · sustainable incomes of oil-producing countries;
• · efficient, cost-effective and regular supply of consumer countries;
• · fair income from investments in the oil industry;
• · environmental protection in the interests of current and future generations.
• · cooperation with non-OPEC countries in order to implement initiatives to stabilize the world oil market.

Thus, the main goal of OPEC is the unified protection of its economic interests. In essence, OPEC laid the foundation for interstate regulation in the energy sector in relation to the global oil market.

Only founding members and those countries whose applications for admission have been approved by the conference can be full members.

Any other country that exports crude oil on a significant scale and has interests fundamentally similar to those of the member countries may become a full member, provided that its admission is approved by a 3/4 majority, including the votes of all founding members.

The energy and oil ministers of OPEC member states meet twice a year to assess the international oil market and forecast its development for the future. At these meetings, decisions are made on the actions that need to be taken to stabilize the market. Decisions on changes in oil production volumes in accordance with changes in market demand are made at OPEC conferences.

OPEC member countries control about 2/3 of the world's oil reserves. They account for 40% of world production or half of world oil exports. Peak oil has not yet been passed only by OPEC countries and Russia (among the major exporters).

Major oil exporters such as Brunei, Great Britain, Mexico, Norway, Oman and the Soviet Union, and later Russia, were never members of OPEC.

One of OPEC's tasks is to represent a unified position of oil-producing countries on the world oil market. From 1960 to 1973, the Organization could not really influence the balance of power in the oil market. The situation changed in the first half of the 1970s, when the Western world faced increasing inflation and a shortage of raw materials. The problem of oil shortage has become apparent. For example, the United States was forced to import about 35% of its petroleum products. At this time, OPEC began to defend its position regarding the principles of profit sharing in the oil market.

In October 1973, the Organization imposed an embargo on oil supplies to the United States in response to the latter's support for Israel in the war with Syria and Egypt. A barrel of oil rose in price from $3 to $5.11. By the end of the 70s, oil consumption began to decline for a number of reasons: the activity of non-OPEC countries in the oil market increased; a general decline in the economies of Western countries began to appear; decline in energy consumption. Oil prices began to decline.

During the 1970s, the price of oil continued to rise, as did the price of base metals, rubber, wheat and cotton. The increase in oil prices caused a boomerang effect and led to an increase in the prices of almost all goods and services. In 1974 the index consumer prices grew by 11%, so that in 1975 President Ford was forced to enact an anti-inflation program.

Oil revenues for major Arab oil-producing countries, 1973-1978. grew at an unprecedented pace. For example, the income of Saudi Arabia increased from $4.35 billion to $36 billion, Kuwait - from $1.7 billion to $9.2 billion, Iraq - from $1.8 billion to $23.6 billion.

However, by the end of the 70s, oil consumption began to decline for a variety of reasons. Firstly, the activity of non-OPEC countries has increased in the oil market. Secondly, a general decline in the economies of Western countries began to appear. Third, efforts to reduce energy consumption have borne some fruit. In addition, the United States, concerned about possible shocks in oil-producing countries due to the high activity of the USSR in the region, especially after the introduction Soviet troops to Afghanistan, were ready to use military force if the situation with oil supplies repeated. Eventually, oil prices began to decline.

After the 1973 embargo, Kissinger and Nixon began searching for a partner in the Middle East. Their choice was Iran, which did not take part in the embargo against the United States. Iran allowed ships to refuel in its ports and supported the US position towards the USSR. However, despite all the measures taken, the second oil crisis broke out in 1978. The main reasons were the revolution in Iran and the political resonance that the Camp David agreements caused between Israel and Egypt. By 1981, the price of oil reached $40 per barrel.

Ultimately, market forces, the active development of energy conservation programs in Western countries and disagreements among OPEC members led to lower oil prices. Since 1981, the price of oil has been gradually falling, until recently. And although just recently it seemed that the 1981 level was unlikely to be reached in the foreseeable future, the situation has not only worsened, it has gotten out of control. It appears that the necessary lessons have not been learned from the past.

The weakness of OPEC was fully revealed in the early 1980s, when, as a result of the full-scale development of new oil fields outside OPEC countries, the widespread introduction of energy-saving technologies and economic stagnation, the demand for imported oil in the industrial developed countries sharply decreased, and prices fell by almost half.

The main disadvantage of OPEC is that it brings together countries whose interests are often opposing.

Saudi Arabia and other countries on the Arabian Peninsula are sparsely populated but have vast oil reserves, large foreign investments and very close relationships with Western oil companies.

Other OPEC countries, such as Nigeria, have high populations and poverty, have expensive economic development programs, and are heavily indebted. These countries are forced to produce and sell as much oil as possible.

Countries included in OPEC belong to different groups. The radical group includes Iraq, Iran, Libya and Algeria. They traditionally advocate setting prices for as much as possible high level. The rest of the countries can be classified as moderate, which accordingly advocates moderate policies. Oil exporting countries realized that by regulating production volumes they could control oil prices, but also oil importing countries, and in a number of cases, oil monopolies, did everything to prevent let OPEC curb the growth of oil supply. In their pressure on OPEC, oil importing countries, and primarily the United States, have used and are using objective differences between OPEC member countries on the issue of expanding oil production. Many researchers emphasize the US desire to disrupt the unity of oil-producing countries and exclude the possibility of their joint actions. American capital, by hook or by crook, sought to strengthen its position in some oil-producing countries.