Organization of the Petroleum Exporting Countries (OPEC)
Candlefocus EditorThe founding members of OPEC were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Since then, membership has grown to include Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, the Republic of Congo, Libya, Nigeria, Qatar, the United Arab Emirates and Venezuela. These nations collectively comprise approximately 73-percent of the world’s total oils reserves and produce around 43-percent of the world’s oil supply.
For decades, OPEC enjoyed supreme authority as the world’s sole oil producer. Up until 2017, OPEC members generally managed to maintain an agreed-upon quota production ceiling and as a result, were able to manage oil prices relatively efficiently, whether allowing increases or decreases when needed. The arrival of fracking technology in the US has since disrupted their hegemony and has undermined OPEC’s ability to control the worldwide market. Consequently, American fracking is now producing more oil than the combined OPEC nations.
While much criticism has been leveled at OPEC's ability to control prices, its primary purpose has been to stabilize oil supplies around the world and maintain steady prices - working within the real-world confines of each country’s legal framework and political situation. It also serves an important role in promoting geopolitical stability and constructive dialogue on issues that many nations find difficult to dialogue on together such as climate change, energy security and other energy-related matters.
In conclusion, OPEC is a unique organization of 13 of the world’s major oil-exporting nations. Established in 1960, it seeks to manage the supply of oil in order to determine prices on the world-market, achieving more stable and profitable prices for members. Although with the recent introduction of new fracking technology, the organization has lost some of its power in the global market, it still plays an important role in geopolitics and international dialogue.