The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organization created to manage the oil policy of oil-producing OPEC member countries.

Countries included in OPEC in 2018-2019

OPEC currently consists of the following 14 countries:

1. Algeria (1969).
2. Angola (2007).
3. Venezuela (1960).
4. Gabon (1975).
5. Iraq (1960).
6. Iran (1960).
7. Congo (2018).
8. Kuwait (1960).
9. Libya (1962).
10. Nigeria (1971).
11. United United Arab Emirates (1967).
12. Saudi Arabia (1960).
13. Ecuador (1973).
14. Equatorial Guinea (2017).

Until 2019, the membership consisted of 15 countries, including Qatar, which in December 2018 announced its withdrawal from OPEC on January 1, 2019.

The Russian Federation, being the world leader in oil production, is not part of OPEC. Russia can participate in OPEC discussions, but cannot influence the organization’s decision-making or the setting of oil prices.

The organization's Charter distinguishes between founding members and full members whose applications have been accepted by the Conference, which is held twice a year at OPEC headquarters.

Former OPEC members

The composition of the organization's participants changed. On this moment the following countries are not represented in it, which for one reason or another suspended their membership: Indonesia (2016), Qatar (2019).

OPEC goals:

• coordination and unification of oil policies among member countries to ensure fair and stable prices for oil producers;
• efficient, economical and regular supplies of oil to consuming countries;
• fair return on capital for those investing in the industry.

The main goals of the organization are stated in the OPEC Charter:

1. The main goal of the Organization is to coordinate and unify the oil policies of member countries and determine the best means to protect their interests, individually and collectively.
2. The organization is developing ways and means to ensure price stabilization in international oil markets, where the goal is to eliminate unreasonable fluctuations.
3. Attention must always be given to the interests of the nation and the need to ensure stable income in producing countries. Efficient, economical and regular supply of oil to consuming countries and a fair return on investment for those investing in the oil industry.

History of the creation of OPEC

The Organization of Petroleum Exporting Countries was created at the Baghdad Conference on September 10-14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

In the first five years of its existence, OPEC's headquarters were in Geneva (Switzerland), and on September 1, 1965, it was moved to Vienna (Austria).

1960s
The formation of OPEC by five oil-producing developing countries in Baghdad in September 1960 occurred during a period of transition in the international economic and political landscape with extensive decolonization and the birth of many newly independent states in the developing world. Membership grew to ten: Qatar (1961); Indonesia (1962); Libya (1962); United Arab Emirates (1967); Algeria (1969).

1970s
During this decade, OPEC rose to international prominence as its member countries took control of their domestic oil industries and gained major influence over crude oil prices on world markets. Membership grew to 13: Nigeria (1971); Ecuador (1973); Gabon (1975).

1980-1990s
A large excess of oil and consumers moving away from this hydrocarbon. OPEC's share of the smaller oil market has fallen sharply. One country left OPEC: Ecuador (1992), and Gabon (1995) suspended its membership.

2000s
Prices soared to record levels in mid-2008 before collapsing amid the global financial crisis and economic downturn. OPEC has taken a prominent role in supporting the oil sector as part of global efforts to overcome the economic crisis. One country joined OPEC and one regained membership: Ecuador (2007); Angola (2007). Indonesia (2009) suspended its membership.

From 2010 until now
The global economy posed a major risk to the oil market at the start of the decade, as global macroeconomic uncertainty and increased risks associated with international financial system, put pressure on the economy. Escalating social unrest in many parts of the world impacted both supply and demand during the first half of the decade, although the market remained relatively balanced. During this period of time, the membership expanded: Equatorial Guinea (2017); Congo (2018). Reinstated membership: Gabon (2016); Indonesia (2016), but in the same year suspended membership again. Qatar left the organization (2019).

OPEC oil basket

Graph. 1. Change in the value of the OPEC oil basket from 2007 to 2017.

The OPEC oil basket is calculated as the arithmetic average of the following types of oil:*

• Arab Light (Saudi Arabia);
• Basra Light (Iraq);
• Bonny Light (Nigeria);
• Djeno (Congo);
• Es Sider (Libya);
• Girassol (Angola);
• Iran Heavy (Iran);
• Kuwait Export (Kuwait);
• Merey (Venezuela);
• Murban (UAE);
• Oriente (Ecuador);
• Rabi Light (Gabon);
• Saharan Blend (Algeria);
• Zafiro (Equatorial Guinea).

*Data as of February 2019.

Oil reserves in OPEC member countries

Graph. 2. Proven oil reserves in OPEC member countries

According to current estimates, 80.33% of the world's proven oil reserves are located in OPEC member countries of which:*

OPEC country	Share in world reserves, %	Share in reserves of OPEC member countries, %
Venezuela	20,39	25,38
Saudi Arabia	17,93	22,32
Iran	10,48	13,05
Iraq	9,91	12,33
Kuwait	6,88	8,56
United Arab Emirates	6,63	8,26
Libya	3,28	4,08
Nigeria	2,54	3,16
Algeria	0,82	1,02
Angola	0,57	0,71
Ecuador	0,57	0,71
Gabon	0,16	0,20
Congo**	0,08	0,10
Equatorial Guinea	0,08	0,10

*2018 data
** 2016 data

Current problems of the organization

The main problems of an organization that unites countries only on the basis of the presence of exports of petroleum raw materials lie mainly in the internal problems of the participating countries. These include the cost of oil production, population size, and poverty, which often do not help to reach a common opinion on regulating production quotas. Also, the main reserves of countries are concentrated in the Middle East, where countries are constantly faced with increasing aggression from terrorist organizations, exerting Negative influence for the entire economy of the region.

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 purpose 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)

--

	Algeria	Indonesia	Iran	Iraq	Kuwait	Libya	Nigeria	Qatar	Saudi Arabia	UAE	Venezuela
Population (thousand people)	32,906	217,99	68,6	28,832	2,76	5,853	131,759	824	23,956	4,5	26,756
Area (thousand km 2)	2,382	1,904	1,648	438	18	1,76	924	11	2,15	84	916
Population density (persons per km 2)	14	114	42	66	153	3	143	75	11	54	29
GDP per capita ($)	3,113	1,29	2,863	1,063	27,028	6,618	752	45,937	12,931	29,367	5,24
GDP at market prices (millions of $)	102,439	281,16	196,409	30,647	74,598	38,735	99,147	37,852	309,772	132,15	140,192
Export volume (million $)	45,631	86,179	60,012	24,027	45,011	28,7	47,928	24,386	174,635	111,116	55,487
Oil export volume (million $)	32,882	9,248	48,286	23,4	42,583	28,324	46,77	18,634	164,71	49,7	48,059
Current balance ($ million)	17,615	2,996	13,268	-6,505	32,627	10,726	25,573	7,063	87,132	18,54	25,359
Proven oil reserves (million barrels)	12,27	4,301	136,27	115	101,5	41,464	36,22	15,207	264,211	97,8	80,012
Proven natural gas reserves (billion cubic meters)	4,58	2,769	27,58	3,17	1,557	1,491	5,152	25,783	6,9	6,06	4,315
Crude oil production volume (1,000 bbl/day)	1,352	1,059	4,092	1,913	2,573	1,693	2,366	766	9,353	2,378	3,128
Natural gas production volume (million cubic meters/day)	89,235	76	94,55	2,65	12,2	11,7	21,8	43,5	71,24	46,6	28,9
Oil refining capacity (1,000 bbl/day)	462	1,057	1,474	603	936	380	445	80	2,091	466	1,054
Petroleum products production (1,000 barrels/day)	452	1,054	1,44	477	911	460	388	119	1,974	442	1,198
Consumption of petroleum products (1,000 bbl/day)	246	1,14	1,512	514	249	243	253	60	1,227	204	506
Crude oil export volume (1,000 bbl/day)	970	374	2,395	1,472	1,65	1,306	2,326	677	7,209	2,195	2,198
Petroleum products export volume (1,000 bbl/day)	464	142	402	14	614	163	49	77	1,385	509	609
Volume of natural gas exports (million cubic meters)	64,266	36,6	4,735	--	--	5,4	12	27,6	7,499	--

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. The Secretary General is the highest official of the Organization, the plenipotentiary representative of OPEC and the 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

OPEC's mission since the 1960s has been to present a unified position for oil-producing countries in order to limit the influence of the largest oil companies on 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 a period of economic recession began for Western countries. 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 in 1976, OPEC created the Fund international development OPEC is 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 if the situation with oil supplies repeated. Eventually, oil prices began to decline.

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

OPEC's weakness was fully revealed in the early 1980s, when, as a result of the full-scale development of new oil fields outside OPEC countries, widespread adoption of energy-saving technologies and economic stagnation, demand for imported oil in industrialized countries fell sharply 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. The monarchs and rulers of the countries upon which wealth fell, sought to use it “for the glory of their own people” and therefore started various “construction projects of the century” and other similar projects that cannot 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.

The third, main problem is to compensate 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 carried out through comprehensive government assistance to 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 ranges from a low of 48% in the case of the United Arab Emirates to 97% in Nigeria.

OPEC decisions on oil prices are one of the most important factors in fundamental analysis. The dynamics of trading in this product depend on them.

Today you will learn what OPEC is and how OPEC oil exporting countries influence the production of raw materials, what kind of organization it is, how it regulates quotas for obtaining black gold from the bowels of the earth, what kind of relations it has with Russia and many other important things for a trader and investor questions.

What is OPEC in simple words

- This international organization, which brings together the governments of 15 oil exporting countries. Initially, it consisted of 5 countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. It was created during the Baghdad Conference in 1960. Later, other states joined this country, such as Qatar, Libya, UAE, Nigeria and others. Indonesia and Gabon were also members of this organization at one time, but now they are no longer part of it.

OPEC is an abbreviation for The Organization of the Petroleum Exporting Countries (OPEC) - Organization of Petroleum Exporting Countries.

From 1960 to 1965, the headquarters of oil exporters OPEC was in Geneva, but already in September 1965 it began to be permanently located in Vienna.

The purpose of the organization is to unite oil exporting states to regulate economic policy in this industry: to ensure adequate prices for black gold, to ensure constant and fair supplies to consumer countries.

OPEC in simple words is an international organization created to ensure that all oil exporters and consumers have a good time.

Wikipedia says that OPEC is an organization that controls two-thirds of all oil reserves existing in the world. About a third of black gold production and half of exports go to the 15 countries that are part of this organization.

OPEC countries and OPEC oil production

Today the organization includes 15 countries (OPEC oil exporting countries):

1. Kuwait.
2. Qatar.
3. Algeria.
4. Libya.
5. Iraq.
6. Equatorial Guinea.
7. Venezuela.
8. Iran.
9. Nigeria.
10. Congo.
11. Gabon.
12. Ecuador.
13. Angola.

Despite the fact that the organization includes OPEC oil exporting countries from the most different parts world, the Kingdom of Saudi Arabia (KSA), as well as other states located on the Arabian Peninsula, have the greatest influence.

The thing is that it is KSA that has the ability to produce huge amounts of oil, while other states have both smaller oil reserves and less modern technologies.

It is for this reason that the organization's policies are largely determined by the monarchies of the Arabian Peninsula, although Iran, Venezuela and other countries also have a say.

OPEC countries, like other countries of the world, participate in world politics, and therefore are forced to follow various trends.

For example, Iran, which has been under Western sanctions for a long time, last years participated in OPEC affairs less and less, because its oil was not bought, fearing hostile actions on the part of the country that imposed these sanctions (USA, Britain and other states). If in the past the headquarters of this organization was in Geneva, Switzerland, today it is located in the capital of Austria - Vienna.

This organization consists of dependent from state oil. Any state can apply to join. Let us consider the states that are part of this intergovernmental organization in more detail.

Countries of Asia and the Arabian Peninsula

This category includes Iran, Iraq, Qatar, Kuwait, UAE and Saudi Arabia. Until January 2009, Indonesia was also on this list. Countries in this category are characterized by a monarchical system. There have been constant conflicts over black gold since the mid-twentieth century. In particular, wars are created specifically to destabilize the market for these raw materials.

South American countries

This category includes Venezuela and Ecuador. The first was one of the initiators of the creation of this organization. IN Lately The economic situation of this country leaves much to be desired. Its national debt has risen due to the political crisis and falling oil prices. At one time, this country was quite developed because oil was expensive. The Venezuela example tells us how important diversification is.

As for Ecuador, this country has a very large public debt ( half of GDP). In addition, she had to pay $112 million for failure to fulfill obligations that were forty years ago, which greatly crippled the economy.

African countries

This country is characterized by a low standard of living, partly due to the oversaturation of the oil market. In addition, these OPEC member states have very large populations and high unemployment.

How OPEC affects the price of oil in examples

OPEC oil production quotas are powerful tools to influence the price of black gold, which are designed to reduce supply when demand is high. This practice has proven highly effective over several decades.

A quota is the amount of oil that can be supplied to participants in this intergovernmental organization.

This instrument was first used in 1973, when the issue size was reduced by 5%. As a result, the price of black gold increased by 70%. Another consequence of this decision is a war where the parties to the conflict were Israel, Syria and Egypt.

When members of this organization make a decision, trading activity on financial markets, and this is a good opportunity for a trader to make money.

Major OPEC decisions on oil OPEC decision on oil prices:

1. The main task of this organization is to coordinate the actions of countries that supply oil to oil markets. The organization is engaged in the unification of oil policy, which is very important both for the organization as a whole and for each exporting country individually.
2. Another task of OPEC is to stabilize oil supplies, however, as history has shown, in reality this is not the case. Many OPEC countries (with the exception of the developed countries of the Arabian Peninsula) are Third World countries that have neither technology nor military strength. KSA and other Arab countries can live without oil, but for other countries oil is the only source of income (for example, Iran and Gabon). As a result, they use oil as a weapon, constantly threatening other world states with an oil blockade in case of failure to comply with any decisions.

Iran constantly threatens to attack American ships that protect peace in the Arabian Gulf, demanding the lifting of sanctions.

OPEC's influence is exercised in much the same way as the influence of any other organization. In some cases, OPEC countries may reduce oil production, which will lead to an increase in its cost. They may also impose an oil embargo.

In the last century this led to an energy crisis in Western Europe, when some EU countries refused to support Arab countries during a defensive war with Israel. After that, the whole world saw footage of how the head of the Netherlands was forced to get to work by bicycle.

OPEC is also trying to coordinate its actions with Russia in order to more effectively influence world prices.

• Some Western countries believe that OPEC is gradually monopolizing the oil market and is trying to exclude Iran from the cartel, since this country is subject to sanctions from many countries in the world and discredits OPEC by its very presence at the negotiating table.

Despite numerous accusations, OPEC plays an extremely important role in the world economy and politics, since even the most advanced technologies are not able to replace oil, which is the main source of energy on the planet.

OPEC Oil Production – Quotas and Regulations

The value of OPEC oil production quotas is influenced by the global situation on the black gold market. An additional element of regulation is monitoring compliance with agreements between participating countries. Another key concept of regulation is the “price corridor”. If the price goes beyond its limits, then a meeting is held, and the participants agree to adjust quotas so that quotations for raw materials remain within the established limit.

Reducing OPEC oil - simple, but effective method regulation of this market.

Oil production quotas are set based on oil reserves and technologies that the country has for its production. That's why the most a large number of Oil is supplied to the market by KSA. This is the most developed country of the cartel, which has the latest technologies and is capable, with the help of one of the strongest armies in the world, to provide security of oil supplies to any point on Earth.

Also, oil supply quotas may be reduced if prices for “black gold” fall. Some EU countries believe that in this way the cartel artificially inflates prices, but this is the sovereign right of all cartel participants.

Also, OPEC's policies in the past made it possible to formulate a unified policy of struggle against oil corporations. As a result, both the attitude towards the cartel participants and the authority of this global organization changed. Since the organization includes almost all the largest oil suppliers, the effectiveness of the organization’s decisions is not in doubt.

OPEC basket and oil prices

People first started talking about the OPEC oil price basket in 1987. This is a collective concept that includes the prices of all types of oil produced in the participating countries, from which the arithmetic average was derived.

The price corridor is set based on the cost of the basket. Its highest price was recorded on July 3, 2008, when the average price for oil from OPEC member states was almost $141 per barrel.

Interesting situation regarding Indonesia. Despite the fact that it left OPEC in 2009, its oil was included in the basket in 2016.

History of OPEC relations with Russia

In the USSR in the 60s of the last century, the attitude towards OPEC was initially positive, because this organization served as a real counterweight to the oil monopolies of the West during the Cold War. Soviet leaders then believed that if it were not for a certain brake in the form of the US allies among the developed Middle Eastern states, then the OPEC member countries could almost follow the path of communism, although this was impossible. This, as the future showed, did not happen.

At the same time, the USSR was, as it were, “on the sidelines” and was in no hurry to join the newly created organization, even despite the presence of allies in it. The Soviet Union did not like the then charter of the organization, in particular, the impossibility of becoming a first-class member. After all, only the founder could become it. In addition, there were points that were incompatible with a command economy (in particular, about investments from Western countries).

OPEC was first brought to the top of world politics during the first energy crisis of 1973-74. It broke out as a result of the oil embargo imposed by oil-producing Arab countries against Western countries allies of Israel, and OPEC fully supported this action. Then many Western countries returned to the Middle Ages, as they ran out of fuel and energy. After this incident, world prices made a sharp threefold jump and brought the world oil market to a completely new stage of development.

At that time, the USSR, already among the world's largest suppliers of “black gold,” even considered the possibility of direct entry into OPEC, where its then friends of the USSR Iraq, Algeria and Libya played important roles. However, the matter did not come to accession, and this, most likely, was prevented by the OPEC Charter.

The fact is that he could not become a full member of the USSR, because he was not among the founders of this organization. Secondly, the Charter contained certain provisions that were then absolutely unacceptable for a closed and inefficient communist economy. For example, members of the organization had to ensure freedom of investment in their oil industry for oil consumers, namely the USA, Britain, France and other Western countries, as well as guarantee income and return of capital to investors. In the USSR, the concept of “private property” was quite vague, so ensuring this condition Soviet authorities could not.

OPEC and modern Russia

Concerning modern Russia, then its history of relations with OPEC began in 1998, when it became an observer. From now on, she takes part in the organization’s Conferences and other events related even to countries that are not part of it. Russian ministers regularly meet with the organization's top officials and colleagues. In relations with OPEC, Russia was also the initiator of some activities, in particular, Energy dialogue.

There are also difficulties in relations between OPEC and Russia. First of all, the first is afraid that Russia will increase its market share. In response to this, OPEC is going to reduce oil production, provided that the Russian Federation does not agree to do this. This is why it is impossible to restore world oil prices. In general, OPEC and Russian oil are a bit of a sore point in relations.

In general, relations between the Russian Federation and OPEC are favorable. In 2015, she was even invited to join the ranks of this country, but Russia decided to remain in the role of observer.

The oil cartel did not initially have the political influence it has now. At the same time, even the participating countries did not fully understand why they were creating it, and their goals were different. But now it is an important player in the black gold market, and here are some interesting facts about it.

1. Before OPEC was created, there were 7 transnational corporations that completely controlled the oil market. After this cartel appeared, the situation changed radically, and the monopoly of private companies disappeared. Now only 4 companies remain, because some were absorbed and some merged.
2. The creation of OPEC has changed the balance of power to such an extent that it now decides what the price of oil will be. If the price decreases, production immediately decreases and the cost of black gold increases. Of course, the strength of an organization is this moment not as big as before, but still decent.
3. OPEC countries control 70% of the world's oil. The downside to these statistics is that production is not independently audited, so you have to take OPEC's word for it. Although it is likely that this amount of OPEC oil reserves corresponds to reality.
4. OPEC was able to create a powerful energy crisis by increasing the price by 450%. Moreover, this decision was deliberate and was directed against the United States and other states supporting Israel during the war with Egypt and Syria. On the other hand, the emergence of the crisis led to the fact that many countries began to form strategic reserves of valuable fuel.

And finally, the main one interesting fact we will take it out separately. Despite the fact that OPEC has a significant influence on the price of oil, it does not directly depend on it. Prices are set during trading on exchanges. It’s just that the cartel knows the trader’s psychology well and knows how to force him to enter into transactions in the direction they want.

OPEC and traders

It would seem that an association of countries that produce 1.3–1.4 billion tons of oil in just 1 year and provide two-thirds of exports to the world market are able to effectively control prices. However, life has shown that in reality everything is more complicated. Quite often, especially recently, OPEC's efforts to adjust prices either do not produce the desired effects or even lead to unexpected negative results.

With its introduction in the early 1980s, the financial market began to have a much greater influence on the formation of prices for “black gold”. If in 1983 positions on oil futures for 1 billion barrels of oil were opened on the New York Mercantile Exchange, then in 2011 they were already opened for 365 billion barrels. And this is many times more than the entire world oil production.

In addition to the New York Mercantile Exchange, oil futures are traded on other exchanges. In addition, there are other financial instruments (derivatives) that are tied to oil.

Because of this, every time OPEC makes a decision to adjust world prices, it is actually only outlining the intended direction for changes in world prices. Players in financial markets actively promote and take advantage of fluctuations in fuel prices, thereby seriously distorting the effects that OPEC measures were designed to achieve.

Conclusion

OPEC appeared in 1960, when the colonial system of the world was almost destroyed and new ones began to appear on the international scene. independent states mainly in Africa or Asia.

At that time, their mineral resources, including oil, were extracted by Western companies, the so-called Seven Sisters: Exxon, Royal Dutch Shell, Texaco, Chevron, Mobil, Gulf Oil and British Petroleum. OPEC destroyed the monopoly of American and British companies (as well as some other countries), freeing from colonial oppression many countries that were occupied by colonial empires. 2 ratings, average: 4,50 ). Please rate us, we tried very hard!

The content of the article

ORGANIZATION OF PETROLEUM EXPORTING COUNTRIES (OPEC)(Organization of Petroleum Exporting Countries, OPEC) is an international economic organization that unites most of the leading oil exporting countries. Regulates the volume of production and the price of oil on the world market. OPEC members control 2/3 of the world's oil reserves.

OPEC's headquarters were initially located in Geneva, later moved to Vienna. Twice a year (not counting extraordinary events) OPEC conferences are held, at which each country is represented by the minister responsible for oil production. In addition to official conferences, ministers also hold informal meetings. The main object of negotiations is the regulation of oil production volumes. Major decisions are made according to the rule of unanimity (the right of veto is in effect, there is no right to abstain). The role of the OPEC President, who leads the organizational work on holding conferences and represents OPEC at various international forums, is performed by one of the ministers of the participating countries. At the 132nd extraordinary OPEC conference in July 2004, Sheikh Ahmad al-Fahd al-Sabah, Minister of Oil Industry of Kuwait, was elected.

In the 2000s, the share of 11 OPEC countries in world oil production was approximately 35–40%, and in exports – 55%. This dominant position allows them to have a strong influence on the development of not only the world oil market, but also the world economy as a whole.

OPEC in the 1960s–1970s: the path to success.

The organization was created in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela to coordinate their relations with Western oil refining companies. How international economic organization OPEC was registered with the UN on September 6, 1962. OPEC was later joined by Qatar (1961), Indonesia (1962), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973, left OPEC in 1992) and Gabon (1975, released in 1996). As a result, the OPEC organization united 13 countries (Table 1) and became one of the main participants in the world oil market.

OPEC countries

Table 1. OPEC COUNTRIES AT THE HIGHEST OF THEIR INFLUENCE (1980)
Countries	GNP per capita, dollars	Share of oil in export value, %	Oil production, million tons	Proven oil reserves, million tons
United Arab Emirates (UAE)	25,966	93,6	83	4,054
Qatar	25,495	95,2	23	472
Kuwait	19,489	91,9	81	9,319
Saudi Arabia	14,049	99,9	496	22,946
Libya	11,327	99,9	86	3,037
Gabon	6,138	95,3	9	62
Venezuela	4,204	94,7	113	2,604
Iraq	3,037	99,2	130	4,025
Algeria	2,055	91,7	51	1,040
Iran	1.957	94,5	77	7,931
Ecuador	1.203	54,1	11	153
Nigeria	844	95,3	102	2,258
Indonesia	444	72,1	79	1,276

The creation of OPEC was caused by the desire of oil exporting countries to coordinate efforts to prevent a decline in world oil prices. The reason for the formation of OPEC was the actions of the “Seven Sisters” - a global cartel that united the companies British Petroleum, Chevron, Exxon, Gulf, Mobil, Royal Dutch Shell and Texaco. These firms, which controlled the refining of crude oil and the sale of petroleum products throughout the world, unilaterally reduced the purchase prices for oil, based on which they paid income taxes and royalties (rent) for the right to develop natural resources to oil-producing countries. In the 1960s, there was an excess supply of oil on world markets, and the original purpose of creating OPEC was to agree to limit oil production simply to stabilize prices.

In the 1970s, under the influence of the rapid development of transport and the construction of thermal power plants, global oil demand increased sharply. Now oil-producing countries could coordinately increase rent payments from oil producers, significantly increasing their income from oil exports. At the same time, artificial containment of oil production volumes led to an increase in world prices (Table 2).

Dynamics of current prices and rent payments for reference oil

Table 2. DYNAMICS OF CURRENT PRICES AND RENT PAYMENTS FOR STANDARD OIL*
Years	Current selling prices, dollars per barrel	Rent payments (royalties plus income tax)
1960	1,50	0,69
1965	1,17	0,78
February 1971	1,65	1,19
January 1973	2,20	1,52
November 1973	3,65	3,05
May 1974	9,55	9,31
October 1975	11,51	11,17
* The reference oil is oil from Saudi Arabia. Oil from other countries is converted into a reference oil depending on its fuel value.

In 1973–1974, OPEC managed to achieve a sharp increase in world oil prices by 4 times, and in 1979 – by another 2 times. The formal reason for inflating prices was the Arab-Israeli War of 1973: demonstrating solidarity in the fight against Israel and its allies, the OPEC countries for some time stopped shipping oil to them altogether. Due to the "oil shock", the crisis of 1973–1975 turned out to be the most severe global economic crisis in the entire period since World War II. Having formed and strengthened in the fight against the Seven Sisters oil cartel, OPEC itself has become the strongest cartel in the world oil market. By the early 1970s, its members accounted for approximately 80% of proven reserves, 60% of production and 90% of oil exports in non-socialist countries.

The second half of the 1970s became the peak of OPEC's economic prosperity: demand for oil remained high, soaring prices brought enormous profits to oil-exporting countries. It seemed as if this prosperity would last for many decades.

The economic success of the OPEC countries had a strong ideological significance: it seemed that the developing countries of the “poor South” had managed to achieve a turning point in the fight against developed countries"rich North". The success of OPEC coincided with the rise of Islamic fundamentalism in many Arab countries, which further increased the status of these countries as a new force in global geoeconomics and geopolitics. Realizing itself as a representative of the “third world,” in 1976 OPEC organized the OPEC International Development Fund, a financial institution that provides assistance to developing countries that are not members of OPEC.

The success of this association encouraged other Third World countries exporting primary commodities (copper, bauxite, etc.) to try to use their experience, also coordinating their actions to increase income. However, these attempts were usually unsuccessful, since other commodities were not in such high demand as oil.

OPEC in the 1980s–1990s: a weakening trend.

OPEC's economic success, however, was not very sustainable. In the mid-1980s, world oil prices fell by almost half (Figure 1), sharply reducing OPEC countries' income from “petrodollars” (Figure 2) and burying hopes for long-term prosperity.

The weakening of OPEC was caused by two groups of reasons - a relative decrease in demand for oil and an increase in its supply.

On the one hand, the “oil shock” stimulated the search for new sources of energy not related to oil production (in particular, the construction of nuclear power plants). The widespread adoption of energy-saving technologies has generally led to much slower growth in energy demand than expected. On the other hand, the system of oil production quotas by OPEC members turned out to be unstable - it was undermined both from the outside and from the inside.

Some countries that were also major oil exporters were not included in OPEC - Brunei, Great Britain, Mexico, Norway, Oman and, most importantly, the USSR, which, according to some estimates, has the world's second largest potential oil reserves. These countries benefited from the rise in world prices initiated by OPEC, but they did not obey its decisions to limit oil production.

Within OPEC itself, unity of action was often disrupted. The organic weakness of OPEC is that it unites countries whose interests are often contradictory. Saudi Arabia and other countries on the Arabian Peninsula are sparsely populated but have vast oil reserves, receive large amounts of foreign investment and maintain close relations with the Seven Sisters. Some other OPEC countries, such as Nigeria and Iraq, have high populations, poverty, expensive economic development programs, and high external debt. These countries are forced to produce and sell as much oil as possible to obtain foreign exchange earnings, especially if oil prices decline. The political orientation of the OPEC countries also differs: while Saudi Arabia and Kuwait relied on US support, many other Arab countries (Iraq, Iran, Libya) pursued anti-American policies.

The discord between OPEC countries is aggravated by political instability in the Persian Gulf area. In the 1980s, Iraq and Iran increased oil production to maximum level to pay the costs of war with each other. In 1990, Iraq invaded Kuwait in an attempt to annex it, but the war Persian Gulf(1990–1991) ended with the defeat of Iraq. International trade sanctions were applied to the aggressor, which sharply limited Iraq's ability to export oil. When Iraq was occupied by American troops in 2003, this completely removed this country from being an independent participant in the world oil market.

As a result of the influence of these factors, OPEC lost its role as the main regulator of world oil prices and became only one (albeit very influential) of the participants in exchange trading on the world oil market (Table 3).

Evolution of the oil pricing mechanism

Table 3. EVOLUTION OF THE PRICING MECHANISM ON THE WORLD OIL MARKET IN THE SECOND HALF OF THE 20TH CENTURY.
Market Characteristics	Stages of development of the world oil market
	Before 1971	1971–1986	After 1986
Pricing principle	Cartel		Competitive
Who sets the price	Cartel of oil refining corporations “Seven Sisters”	13 OPEC countries	Exchange
Dynamics of oil demand	Sustainable growth	Alternating growth and decline	Slow growth

Prospects for the development of OPEC in the 21st century.

Despite the difficulties of control, oil prices remained relatively stable throughout the 1990s compared with the fluctuations they experienced in the 1980s. Moreover, since 1999, oil prices have gone up again. The main reason for the change in trend was OPEC's initiatives to limit oil production, supported by other large oil-producing countries that have observer status in OPEC (Russia, Mexico, Norway, Oman). Current world oil prices reached a historical high in 2005, exceeding $60 per barrel. However, adjusted for inflation, they still remain below the level of 1979–1980, when the price in modern terms exceeded $80, although they exceed the level of 1974, when the price in modern terms was $53.

The prospects for OPEC's development remain uncertain. Some believe that the organization managed to overcome the crisis of the second half of the 1980s and early 1990s. Of course, it will not regain its former economic strength as in the 1970s, but overall, OPEC still has favorable opportunities for development. Other analysts believe that OPEC countries are unlikely to be able to comply with established oil production quotas and a clear unified policy for a long time.

An important factor in the uncertainty of OPEC's prospects is associated with the uncertainty of the development paths of global energy as such. If serious progress is made in the use of new energy sources (solar energy, nuclear energy, etc.), then the role of oil in the global economy will decrease, which will lead to a weakening of OPEC. Official forecasts, however, most often predict the persistence of oil as the planet's main energy resource for the coming decades. According to the report International Energy Outlook 2004 According to the information office of the US Department of Energy, the demand for oil will increase so that, at current oil reserves, oil fields will be depleted by about 2050.

Another factor of uncertainty is the geopolitical situation on the planet. OPEC emerged in a situation of relative balance of power between the capitalist powers and the countries of the socialist camp. However, these days the world has become more unipolar, but less stable. On the one hand, many analysts fear that the United States, as the “global policeman,” may begin to use force against those who conduct economic policy, which does not coincide with American interests. Events in Iraq in the 2000s show that these predictions are justified. On the other hand, the rise of Islamic fundamentalism could increase political instability in the Middle East, which would also weaken OPEC.

Since Russia is the largest oil-exporting country that is not a member of OPEC, the issue of our country joining this organization is periodically discussed. However, experts point to the divergence of strategic interests of OPEC and Russia, which is more profitable to remain independently acting force on the oil market.

Consequences of OPEC's activities.

The high incomes received by OPEC countries from oil exports have a dual impact on them. On the one hand, many of them manage to improve the living standards of their citizens. On the other hand, “petrodollars” can become a factor slowing down economic development.

Among the OPEC countries, even the richest in oil (Table 4), there is not a single one that has managed to become sufficiently developed and modern. Three Arab countries - Saudi Arabia, the UAE and Kuwait - can be called rich, but cannot be called developed. An indicator of their relative backwardness is at least the fact that all three still maintain monarchical regimes of the feudal type. Libya, Venezuela and Iran are at approximately the same low level of prosperity as Russia. Two more countries, Iraq and Nigeria, should be considered by world standards not just poor, but very poor.

Countries with the largest oil reserves

Table 4. COUNTRIES WITH THE LARGEST OIL RESERVES IN THE EARLY 2000S
Countries	Share in world oil reserves, %	Share in world oil production by exporting countries, %	GDP per capita, thousand dollars
Saudi Arabia	27	16	13,3
Russia (not part of OPEC)	13	15	7,1
Iraq	10	5	0,8
United Arab Emirates	10	4	20,5
Kuwait	10	4	18,7
Iran	9	7	6,0
Venezuela	7	6	5,7
Libya	3	3	7,6
Nigeria	2	4	0,9
USA (not part of OPEC)	2	0	34,3

The contrast between natural wealth and the lack of noticeable progress in development is explained by the fact that abundant reserves of oil (as well as other “free” natural resources) create a strong temptation to engage in the struggle not for the development of production, but for political control over the exploitation of resources. When a country does not have readily accessible natural resources, income must be obtained through productive activities, the benefits of which accrue to the majority of citizens. If the country is generously endowed natural resources, then its elite is inclined to engage more in rent-seeking than production. Natural wealth can thus turn into a social disaster - the elite gets rich, while ordinary citizens languish in poverty.

Among the OPEC countries, there are, of course, examples where natural resources are exploited relatively efficiently. Prominent examples are Kuwait and the United Arab Emirates. In these countries, current oil revenues are not only consumed, but also put aside in a special reserve fund for future expenses, and are also spent on boosting other sectors of the economy (for example, the tourism business).

Yuri Latov,Dmitry Preobrazhensky

(The Organization of the Petroleum Exporting Countries, OPEC) is an international organization created to coordinate sales volumes and set prices for crude oil.

By the time OPEC was founded, there was a significant surplus of oil on the market, the emergence of which was caused by the beginning of the development of giant oil fields - primarily in the Middle East. In addition, the market entered Soviet Union, where oil production doubled from 1955 to 1960. This abundance has caused severe competition in the market, leading to a constant decline in prices. The current situation was the reason for the unification of several oil exporting countries into OPEC in order to jointly resist transnational oil corporations and maintain the required price level.

OPEC as always operating organization was created at a conference in Baghdad on September 10-14, 1960. Initially, the organization included Iran, Iraq, Kuwait, Saudi Arabia and Venezuela - the initiator of the creation. The countries that founded the organization were later joined by nine more: Qatar (1961), Indonesia (1962-2009, 2016), Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973) -1992, 2007), Gabon (1975-1995), Angola (2007).

Currently, OPEC has 13 members, taking into account the emergence of a new member of the organization - Angola and the return of Ecuador in 2007 and the return of Indonesia from January 1, 2016.

The goal of OPEC is to coordinate and unify the oil policies of member countries to ensure fair and stable oil prices for producers, efficient, economical and regular supplies of oil to consumer countries, as well as a fair return on capital for investors.

The organs of OPEC are the Conference, the Board of Governors and the Secretariat.

The highest body of OPEC is the Conference of Member States, convened twice a year. It determines the main directions of OPEC's activities, decides on the admission of new members, approves the composition of the Board of Governors, considers reports and recommendations of the Board of Governors, approves the budget and financial report, and adopts amendments to the OPEC Charter.

The executive body of OPEC is the Governing Council, formed from governors who are appointed by states and approved by the Conference. This body is responsible for managing the activities of OPEC and for implementing the decisions of the Conference. Meetings of the Board of Governors are held at least twice a year.

The Secretariat is headed by the Secretary General, appointed by the Conference for three years. This body carries out its functions under the guidance of the Board of Governors. It facilitates the work of the Conference and the Governing Council, prepares communications and strategic data, and disseminates information about OPEC.

The highest administrative official of OPEC is the Secretary General.

The acting Secretary General of OPEC is Abdullah Salem al-Badri.

OPEC headquarters is located in Vienna (Austria).

According to current estimates, more than 80% of the world's proven oil reserves are found in OPEC member countries, with 66% of OPEC countries' total reserves concentrated in the Middle East.

Proven oil reserves of OPEC countries are estimated at 1.206 trillion barrels.

As of March 2016, OPEC oil production reached 32.251 million barrels per day. Thus, OPEC exceeds its own production quota, which is 30 million barrels per day.