Organization of Petroleum Exporting Countries


Also found in: Dictionary, Thesaurus, Encyclopedia.

Organization of Petroleum Exporting Countries (OPEC)

A cartel of oil-producing countries.

Organization of Petroleum Exporting Countries

An international organization founded in 1960 whose members collaborate on the production and exportation of oil. Members meet several times a year to discuss oil prices and ways to bring them to an optimal level for members. OPEC has a great influence over the world's oil supply as the organization sets production quotas for member nations. Cutting production tends to result in higher oil prices while raising production tends to lower them. Many of OPEC's member nations are heavily reliant on oil to fund their economies and, as a result, tend to prefer high prices. On the other hand, other members (though the groups overlap) suffer high inflation rates when oil prices are too high. As a result, there is often tension between so-called "price hawks" and other members. See also: Brent blend.

Organization of Petroleum Exporting Countries (OPEC)

an organization established in 1960 with a head office in Vienna to look after the oil interests of its 13 member countries: Saudi Arabia, Kuwait, Iran, Iraq, Venezuela, Qatar, Indonesia, Libya, Abu Dhabi, Algeria, Nigeria, Ecuador and Gabon.

Ecuador withdrew in 1992 and Gabon in 1995. See CARTEL.

Organization of Petroleum Exporting Countries (OPEC)

an organization established in 1960 with a head office in Vienna to look after the oil interests of five countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. By 1973, a further eight countries had joined the OPEC ranks: Qatar, Indonesia, Libya, Abu Dhabi, Algeria, Nigeria, Ecuador and Gabon. Ecuador withdrew in 1992 and Gabon in 1995.

In 1973 OPEC used its power to wrest the initiative in administering oil prices away from the American oil corporations, and the price of oil quadrupled from $2.5 (American dollars) a barrel to over $11.50 a barrel. The effect of this was to produce balance-of-payments deficits in most oil-consuming countries and with it a period of protracted world recession. As the recession bit, oil revenues began to fall, to which OPEC responded by increasing prices sharply again in 1979 from under $15 a barrel to around $28 a barrel.

OPEC is often cited as an example of a successful producers’ CARTEL. In a ‘classical’ cartel market, supply is deliberately restrained in order to force prices up by allocating production QUOTAS to each member. Interestingly, in OPEC's case, because of political difficulties, formal quotas were not introduced until 1982, but these had limited success because of ‘cheating’. The main reason it has been able to successfully increase prices in the past has been that the demand for oil is highly price inelastic. Recently, however, OPEC has been under pressure for two reasons:

  1. the total demand for oil has fallen, partly as a result of the world recession but also because its high price has made it economical to substitute alternative forms of energy (coal, in particular) so that oil is now less price inelastic than formerly;
  2. the increased profitability of oil production has led to a high rate of investment in new oil fields (the North Sea, in particular), and this has weakened the control of OPEC over world supplies. In 2001 OPEC accounted for around 40% of world oil production, compared to over 75% in the 1970s. Apart from a substantial rise in oil prices at the time of the Gulf War in 1991, oil prices remained depressed in the 1990s, falling to under $10 a barrel in 1997. The introduction of stronger production quotas in 1999, however, led to a sharp increase in oil prices to over $30 a barrel, and rising demand led to further price increases over the period 2000–05 (currently $54 a barrel as at April 2005).
Mentioned in ?
References in periodicals archive ?
The Permanent Representative of Kazakhstan to the International Organizations in Vienna, Kairat Sarybay met with Secretary General of the Organization of Petroleum Exporting Countries (OPEC) Abdalla Salem El-Badri.
The Organization of Petroleum Exporting Countries (OPEC) which Kuwait is a member of, in its recent bulletin said that "hot issues " like increasing speculation in the global oil market, as well as changing prices were the primary drivers in the summer season.
Against this backdrop, the president of the Organization of Petroleum Exporting Countries, Nigerian oil minister Edmund Daukoru, says there is a need -- and an agreement -- to cut production by 1 million barrels a day starting next month.
As anyone familiar with the Organization of Petroleum Exporting Countries will know," wrote Cook in a January 21 Asia Times op-ed column, "the denomination of oil sales in currencies other than the dollar is not a new subject, and as anyone familiar with economics will tell you, the denomination of oil sales is merely a transactional issue: what matters is in what assets (or, in the case of the United States, liabilities) these proceeds are then invested.
The Organization of Petroleum Exporting Countries (OPEC) has withdrawn its support for a major road building project in Grenada, because its aid its targeted at "lesser developed" countries, says Works Minister Gregory Bowen, reports CANA (October 24, 1998):
Dubbed by some, the Hangover Decade, the 1970's were marked by rapidly rising prices as an aftermath of the stimulative policies of the 1960's, unusually bad weather affecting the Nation's crops, a deal with the Soviet Union which tied up the country's two freezes and four phases of price controls-and, of course, a massive jump in oil prices twice engineered by the Organization of Petroleum Exporting Countries.
National Energy Technology Laboratory, International Energy Agency, Coal Utilization Research Council, US Department of Energy, Organization of Petroleum Exporting Countries, BP, General Electric, Lehigh University, Electric Power Research Institute, Barr Engineering, Alaska Cowboy Coal Power Consortium, Fuels Management, Inc.
A statement by the Information Office of the Prime Minister, "said that Al-Abadi received in his office on Wednesday, Secretary General of the Organization of Petroleum Exporting Countries Mohammed Sanusi Barkindo and his accompanying delegation, where Abadi stressed the importance of the role of OPEC and Iraq's continuing cooperation with it and support to serve the raising of global oil prices.
In global markets, the crude oil rate also climbed due to a forecast agreement between the Organization of Petroleum Exporting Countries (OPEC) and the major non-OPEC oil producer Russia, next week, on either maintaining the oil price or slashing it.
Organization of Petroleum Exporting Countries earlier announced that it will need to give 30.
Summary: TEHRAN (FNA)- Iranian Oil Minister Rostam Qassemi said that oil ministers of the Organization of Petroleum Exporting Countries (OPEC) have decided not to increase the organization's output ceiling.
Ali bin Ibrahim Al-Naimi headed today the delegation of the Kingdom of Saudi Arabia, participating in a ministerial meeting of the Organization of Petroleum Exporting Countries (OPEC) in the Austrian capital Vienna.

Full browser ?