OPEC (Organization of Petroleum Exporting Countries) 

OPEC (Organization of Petroleum Exporting Countries) - a number of countries, oil developers and exporters, united to regulate oil production and control oil prices.

The history of OPEC began in 1960, when the largest oil producing countries decided to unite in a kind of conclave. The list of countries included in OPEC has been steadily expanding over the years. OPEC participants control almost half of the world's oil production and two-thirds of the development of all fields.

Key features and goals of OPEC:

• • Profit from field development and the oil industry as a whole, as well as from the sale of oil.
• • Control and regulation of oil prices.
• • Maintaining a stable supply of oil to customers.
• • Creation and maintenance of a unified strategy in the development of deposits.
• • Observation of stability and volatility of oil prices.
• • Protecting the interests of OPEC members.
• • Monitoring the technical equipment of countries included in OPEC, modernization and development of technology.
• • Contacts with countries - developers and exporters of petroleum products not included in OPEC, for the mutual development of the global oil market.

OPEC members meet twice a year where there is a discussion and analysis of past market events and forecasts are made for the nearest future. Since countries have different raw materials and OPEC regulates the flow of oil products exported in such a way as to balance the availability of raw materials from all participating countries. It is important to note that all OPEC members are countries whose economy is heavily dependent on oil and whose state budgets are directly dependent on oil exports.

Key areas of OPEC policy:

• • Reducing the monopoly on the production and sale of oil by major non-OPEC developers and exporters.
• • Control and stabilization of baseline prices in different countries. Includes necessary price increases to reduce price differences.
• • Increase in tax rates for the profit from oil production.

OPEC consists of the following countries:

• •Saudi Arabia
• • Iran
• • Iraq
• • Kuwait
• • Qatar
• • Venezuela
• • UAE
• • Angola
• • Algeria
• • Libya
• • Indonesia
• • Nigeria

The Russian Federation remains an independent observer, although it takes part in OPEC discussions.

OPEC structure

• • Conference is the main body of OPEC. The Conference of Ministerial delegates of participating countries. In fact, it is a representation of the Board of Directors. The conference makes key decisions on OPEC policy, budget, participation in the development of the industry, listens to speakers, and within its framework, the OPEC Secretary General is elected.
• • Governing Council - composed of delegates from participating countries. Organizes the composition of speakers, considers new OPEC participants, develops scientific branches and is directly involved in managing all operations.
• • Secretariat - managed by the Board of Governors and consists of three departments.
• • Economic Commission - monitors the stable development of price movements in the global oil market. Engaged in data collection.

Basket OPEC (OPEC Reference Basket) – a representation of a currency basket. The total weight of the basket is the equal weighted price of all grades of oil produced by OPEC member countries. As OPEC members change, the composition of the basket is dynamically transformed. The basket is used during the assessment of world oil reserves, commodity reserves of different countries, and an analysis of production technologies.

To date, the following countries and their oil varieties are included in the basket:

• • Iran (Iran Heavy)
• • Iraq (Basra Light)
• • Algeria (Saharan Blend)
• • Angola (Girassol)
• • Kuwait (Kuwait Export)
• • Qatar (Qatar Marine)
• • UAE (Murban)
• • Saudi Arabia (Arab Light)
• • Ecuador (Oriente)
• • Libya (Es Sider)
• • Venezuela (Merey)
• • Nigeria (Bonny Light)

All OPEC members are equal in their status, despite their different involvement in the organization. This invariably creates problems for OPEC. Political conflicts, different raw materials, different living standards of the population - all these are problems that OPEC has to deal with.

Another major issue is disagreement within OPEC itself. The structure is a powerful economic and political force on the world stage, therefore its decisions are often perceived ambiguously, even among the participants themselves. This, in turn, affects the price volatility of the global oil market.

As an instrument of influence to balance the price, OPEC uses quotas for oil production. Quota data is never published in full, but the estimate when published can be calculated from current reports and final reports. When creating them, the following factors are used for each country:

• • Domestic oil consumption
• • Production volumes
• • Level of population (density and standard of living)
• • Production capacities
• • Development and export costs
• • External debt (if any)
• • General dependence of the economy on oil exports

OPEC is a key player in the global oil market. Its presence and influence on the global economy cannot be ignored.