OPEC (from the English OPEC, The Organization of the Petroleum Exporting Countries) is an organization of oil exporting countries.

What does the organization do?

OPEC coordinates oil production policy and global commodity pricing.

Members of the organization control approximately two-thirds of the proven oil reserves on the planet and carry out 40% of global production.

Main goals of OPEC:

• protecting the interests of the organization’s member countries;
• ensuring stability of prices for oil and petroleum products;
• guarantee of regular oil supplies to other countries;
• providing member countries of the organization stable income from oil sales;
• determining the strategy for oil production and sales.

Who is in OPEC?

OPEC includes 12 countries: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador and Angola. Russia, Mexico, Egypt and Oman are observer countries of the organization.

History of creation

OPEC was created at a conference in Baghdad on September 10-14, 1960. The creation was initiated by Venezuela. OPEC initially included Iran, Iraq, Saudi Arabia, Venezuela and Kuwait.

Later, in different years, this organization includes nine more countries.

Qatar (1961),

Indonesia (1962),

Libya (1962),

United Arab Emirates (1967),

Algeria (1969),

Nigeria (1971),

Ecuador (1973),

Gabon (1975),

Angola (2007).

In 1994, Gabon left the organization, and in 2008, Indonesia left the cartel.

The cartel's headquarters is located in Vienna, the capital of Austria.

Oil production by OPEC member countries in 2013, thousand barrels per day (according to OPEC):

Saudi Arabia - 9,637;

Iran - 3,576;

Iraq - 2,980;

Kuwait - 2,922;

United Arab Emirates - 2,797;

Venezuela - 2,786;

Nigeria - 1,754;

Angola - 1,701;

Algeria - 1,203;

Libya - 993;

Qatar - 724;

OPEC, Russia and other producers are in the midst of a joint effort to force a rebalancing of the oil market, with prices rising to two-and-a-half year highs in recent weeks.

However, with continued strong oil exports dampening market sentiment, CNBC takes a look at the world's top 10 oil exporters.

Oil production and its supporting activities account for approximately 45 percent of Angola's gross domestic product (GDP) and about 95 percent of its exports.

After joining OPEC in 2007, Angola became the sixth largest oil exporter in the Cartel.

9. Nigeria

Nigeria, the most populous country within OPEC, it is the largest exporter and producer of oil in Africa.

8. Venezuela

Venezuela, a founding member of the 14-member cartel, exported about 1.9 million barrels per day in 2016, according to OPEC.

Although the South American country boasts the world's largest oil reserves, it is currently in the midst of a full-blown crisis. The ongoing unrest has been fueled by years of economic inactivity, with the recession added to by a three-year slump in oil prices. Venezuela has experienced food shortages, severe inflation and violent street clashes as President Nicolas Maduro prioritizes repaying international loans.

Oil revenues account for approximately 95 percent of the country's export earnings.

President Donald Trump has threatened to end the international nuclear treaty with Iran, and if the US Congress agrees, Tehran could face new sanctions, affecting the ability of international companies to do business in the oil-rich country.

According to OPEC estimates, in 2016 Kuwait exported more than 2.1 million barrels per day.

The OPEC member country's oil and gas sector accounts for about 60 percent of the country's GDP, as well as 95 percent of export earnings.

5. United Arab Emirates

The United Arab Emirates exported almost 2.5 million barrels per day in 2016, according to OPEC data.

Approximately 40 percent of the country's GDP is directly dependent on oil and gas production. The country, which consists of seven emirates along the Arabian Peninsula, joined OPEC in 1967.

Canada exports just over 3.2 million barrels per day, according to the most recent data published by the World Factbook.

The non-OPEC country exported almost as much as Africa's top two exporters. Canada ranks third in the world in terms of oil reserves.

OPEC and Russian officials have called on some of the world's leading oil producers, both inside and outside the cartel, to form a consensus and support a mechanism to limit supplies until the end of 2018.

And although Iraq is OPEC's second-largest oil producer and exporter, Baghdad has not yet reduced production to the level it agreed to last winter.

Iraq exported 3.8 million barrels per day in 2016, according to data published by OPEC.

2. Russia

Moscow and OPEC have been seeking to cut oil production to clear a global supply glut since January. The goal is to reduce global oil inventories and drain the glut that has driven down prices for the past three years.

1. Saudi Arabia

Saudi Arabia is the world's leading exporter and second largest oil producer. Leader OPEC exported 7.5 million barrels per day in 2016, according to data published on the cartel's website.

The kingdom's successor to the throne ordered the arrest of powerful royal princes and businessmen in early November in what officials called an anti-corruption move.

Some believe the extraordinary purge is an attempt by Mohammed bin Salman to consolidate his power by eliminating potential rivals. And it could mean political uncertainty, tension and perhaps unrest not previously seen in the history of the largest oil producer, OPEC.

The abbreviation OPEC stands for "Association of Petroleum Exporting Countries". The main goal 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.

List of African countries included in OPEC

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

• Gabon;
• Equatorial Guinea;
• Angola;
• Libya;
• Nigeria;
• Algeria.

Most of the “African” OPEC participants joined the organization in the 1960-1970s. At that time many African states freed from colonial rule 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 included in 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. It's going on in Iraq and Libya Civil War. 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. Behind Lately The country's public debt has increased significantly. For some time, the country kept afloat due to high oil prices. But as prices fell, the Venezuelan 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:

• Russia;
• China;

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.

Many companies and specialist representatives from OPEC member countries come to the rather large Neftegaz exhibition held in Moscow.

The Organization of the Petroleum Exporting Countries, founded in 1960 by a number of countries (Algeria, Ecuador, Indonesia, Iraq, Iran, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela) with the aim of coordinating the volume of sales and setting prices for crude oil. oil.

Due to the fact that OPEC controls approximately half of the world's oil trade, it is able to significantly influence the level of world prices. The oil cartel, which was registered with the UN as a full-fledged intergovernmental organization in 1962, accounts for about 40% of world oil production.

Brief economic characteristics of OPEC member states (in 2005)

Main goals of OPEC

The main goals of creating the Organization are:

• Coordination and unification of the oil policies of the member states.
• Determining the most effective individual and collective means of protecting their interests.
• Ensuring price stability on world oil markets.
• Attention to the interests of oil-producing countries and the need to ensure: sustainable income for oil-producing countries; efficient, cost-effective and regular supply of consumer countries; fair returns from investments in the oil industry; security environment in the interests of present and future generations.
• cooperation with non-OPEC countries in order to implement initiatives to stabilize 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.

Organizational structure of OPEC

The highest body of OPEC is the Conference of Ministers of the states that are members of the organization; there is also a Board of Directors, in which each country is represented by one delegate. As a rule, it attracts the closest attention not only from the press, but also from key players in the global oil market. The conference determines the main directions of OPEC's policies, ways and means of their practical implementation and makes decisions on reports and recommendations submitted by the Board of Governors, as well as on the budget. It instructs the Council to prepare reports and recommendations on any issues of interest to the organization. The Conference is formed by the Board of Governors itself (one representative per country, as a rule, these are the ministers of oil, extractive industries or energy). She also elects the president and appoints the general secretary of the organization.

The Secretariat carries out its functions under the guidance of the Board of Governors. Secretary General is the highest official Organization, OPEC Plenipotentiary Representative and Head of the Secretariat. He organizes and directs the work of the Organization. The structure of the OPEC secretariat includes three departments.

The OPEC Economic Commission is dedicated to promoting stability in international oil markets at fair price levels so that oil can maintain its importance as the primary global energy source in accordance with OPEC's objectives, closely monitoring changes in energy markets and keeping the Conference informed of these changes .

History of the development and activities of OPEC

The task of OPEC since the 1960s has been to present a unified position of oil producing countries in order to limit the influence of the largest oil companies To the market. However, in reality OPEC in the period from 1960 to 1973. could not change the balance of power in the oil market. Significant adjustments to the balance of power were made by the war that suddenly began in October 1973 between Egypt and Syria, on the one hand, and Israel, on the other. With the support of the United States, Israel managed to quickly regain the lost territories and already in November sign ceasefire agreements with Syria and Egypt.

October 17, 1973 OPEC opposed US policy by imposing an embargo on oil supplies to this country and increasing selling prices for the United States' Western European allies by 70%. Overnight, a barrel of oil rose in price from $3 to $5.11. (In January 1974, OPEC raised the price per barrel to $11.65). The embargo was introduced at a time when about 85% of American citizens were already accustomed to driving their own car to work. Although President Nixon introduced strict restrictive measures on the use of energy resources, the situation could not be saved, and for Western countries a period of economic recession began. At the peak of the crisis, the price of a gallon of gasoline in the United States rose from 30 cents to $1.2.

Wall Street's reaction was immediate. Naturally, in the wake of super profits, shares of oil producing companies went up, but all other shares in the period from October 17 to the end of November 1973 lost an average of 15%. During this time, the Dow Jones index fell from 962 to 822 points. In March 1974, the embargo against the United States was lifted, but the effect it had had could not be smoothed out. In the two years from January 11, 1973 to December 6, 1974, the Dow fell nearly 45%, from 1,051 to 577.

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.

In the wake of high oil revenues, OPEC created the OPEC Fund for International Development in 1976, a multilateral development financial institution. Its headquarters are also located in Vienna. The Fund is designed to promote cooperation between OPEC member states and other developing countries. International institutions whose activities benefit developing countries and all non-OPEC developing countries can benefit from the fund. The OPEC Fund provides loans (on preferential terms) of three types: for projects, programs and balance of payments support. Resources consist of voluntary contributions from member states and profits generated through the fund's investment and lending operations.

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, the high activity of the USSR in the region, especially after the introduction Soviet troops to Afghanistan, were ready to use military force. Eventually, oil prices began to decline.

Despite all Taken measures, in 1978 the second oil crisis broke out. 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.

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. After this, the oil market experienced calm and a gradual decline in oil prices for 5 years. However, when in December 1985 OPEC sharply increased oil production to 18 million barrels per day, a real price war began, provoked by Saudi Arabia. Its result was that within a few months, crude oil fell in price by more than half - from 27 to 12 dollars per barrel.

The fourth oil crisis occurred in 1990. On August 2, Iraq attacked Kuwait, prices jumped from $19 per barrel in July to $36 in October. However, then oil prices fell to its previous level even before the start of Operation Desert Storm, which ended with the military defeat of Iraq and the economic blockade of the country. Despite persistent oil overproduction in most OPEC countries and increased competition from other oil-producing countries, oil prices remained relatively stable throughout the 1990s compared to the fluctuations they experienced in the 1980s.

However, at the end of 1997, oil prices began to fall, and in 1998, the world oil market was gripped by an unprecedented crisis. Analysts and experts cite many different reasons for this sharp drop in oil prices. Many are inclined to place all the blame on OPEC's decision, made at the end of November 1997 in Jakarta (Indonesia), to increase the ceiling on oil production, as a result of which additional volumes of oil were allegedly released onto the markets and a decrease in prices occurred. The efforts made by OPEC and non-OPEC countries in 1998 undoubtedly played a critical role in preventing a further collapse of the global oil market. Without the measures taken, the price of oil, according to some experts, could have fallen to 6-7 dollars per barrel.

Development problems of OPEC countries

One of the main disadvantages of OPEC is that it brings together countries whose interests are often opposed. 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 and have expensive programs economic development and are in huge debt.

The second seemingly simple problem is the banal “where to put the money.” After all, it is not always easy to properly manage the shower of petrodollars pouring into the country. Monarchs and rulers of countries that were overwhelmed by wealth sought to use it “for the glory of own people“and therefore they started various “construction projects of the century” and other similar projects, which cannot in any way be called a reasonable investment of capital. Only later, when the euphoria from the first happiness had passed, when the ardor had cooled a little due to the fall in oil prices and the decline in government revenues, did the state budget begin to be spent more wisely and competently.

Third, main problem is compensation for the technological backwardness of the OPEC countries from the leading countries of the world. After all, by the time the organization was created, some of the countries that were part of it had not yet gotten rid of the remnants of the feudal system! The solution to this problem could be accelerated industrialization and urbanization. The introduction of new technologies into production and, accordingly, people’s lives did not pass without leaving a mark on the people. The main stages of industrialization were the nationalization of some foreign companies, for example ARAMCO in Saudi Arabia, and the active attraction of private capital into industry. This was done through comprehensive state aid the private sector of the economy. For example, in Arabia, 6 special banks and funds were created that provided assistance to entrepreneurs under state guarantees.

The fourth problem is the insufficient qualifications of national personnel. The fact is that workers in the state were unprepared for the introduction of new technologies and were unable to maintain modern machines and equipment that were supplied to oil production and processing enterprises, as well as other factories and enterprises. The solution to this problem was to attract foreign specialists. It wasn't as easy as it seems. Because this soon gave rise to a lot of contradictions, which intensified with the development of society.

Thus, all eleven countries are deeply dependent on the income of their oil industry. Perhaps the only exception among OPEC countries is Indonesia, which receives significant income from tourism, timber, gas and other raw materials. For the remaining OPEC countries, the level of dependence on oil exports varies from the lowest - 48% in the case of the United United Arab Emirates up to 97% in Nigeria.

The implementation of international commodity agreements regulating activities in certain market segments is carried out by International Commodity Organizations (ICOs) in the form of:

• International organizations;
• International Councils;
• International Advisory Committees;
• International Research Groups (IRGs).

All of these institutes are engaged in studying the state of world commodity markets, namely: the current relationship between supply and demand for specific raw materials, the dynamics of prices and conditions.

Currently there are International Councils for olive oil, tin, grain.

MIGs apply to rubber, lead and zinc, and copper.

There is an International Cotton Advisory Committee and a Tungsten Committee.

Iran has the second largest oil reserves after Saudi Arabia (18 billion tons) and occupies 5.5% of the global oil products trading market. Particular attention is paid to economic diversification through the development of precision engineering, automotive engineering, the rocket and space industry, and information technology.

A major oil exporter is Kuwait. Oil production provides 50% of Kuwait's GDP, its share in the country's exports is 90%. The country also has developed oil refining and petrochemicals, the production of building materials, fertilizers, the food industry, and pearl mining. Desalination in progress sea ​​water. Fertilizers constitute an important part of the country's exports.

Iraq has the second largest oil reserves in the world. Iraqi state companies North Oil Company and South Oil Company have a monopoly on the development of local oil fields. Iraq's southern fields, managed by SOC, produce about 1.8 million barrels of oil per day, accounting for almost 90% of all oil produced in Iraq.

Thus, Most OPEC countries are deeply dependent on the income of their oil industry. Perhaps the only exception among the member countries of the organization is Indonesia, which receives significant income from tourism, timber, gas and other raw materials. For the remaining OPEC countries, the level of dependence on oil exports ranges from a low of 48% in the case of the United Arab Emirates to 97% in Nigeria.

During a crisis, the strategic path for countries dependent on oil exports is to diversify their economies through the development of the latest resource-saving technologies.