- October 27, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Subject: International Organization
Context: The Organization of Petroleum Exporting Countries (OPEC) is hoping that lockdowns and curfews in some countries in the event of a second or third wave of COVID-19 infections will not dent global energy demand as much as in the second quarter of this year.
- The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad in 1960 and headquartered in Vienna.
- OPEC has 14 member countries including the Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela as its founder members.
- Currently, the Organization has a total of 13 Member Countries. Qatar is the last country to terminate its membership.
- In its biannual meetings, oil ministers agree on production quotas for each member. They can control production since most of the member countries have state-run oil firms.
- OPEC’s stated objective is to co-ordinate and unify petroleum policies among member countries and ensure stable prices for petroleum producers.
- Most OPEC countries rely heavily on revenue from oil sales. High oil prices can hurt demand and low prices can affect the budget. Hence the organization tries to balance oil prices from getting too low or too high.
- OPEC+ refers to the group of 24 crude producers comprising OPEC members and non-OPEC members including Russia.
- The OPEC members’ bloc is led by Saudi Arabia while Russia is the biggest producer amongst the non-OPEC members.
- OPEC controls 35% of global oil supplies and 82% of proven reserves. These figures increase to 55% and 90% respectively with the addition of non-members to form the OPEC+ group. This enables the OPEC+ group to have substantial control of oil prices around the world economy.