OPEC - Petroleum Exporting Countries

By: EconomyWatch   Date: 30 June 2010

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The mission of OPEC or the Organization of the Petroleum Exporting Countries is to combine and organize the petroleum policies of the different member-nations. This standardized the oil markets, by initiating economic and efficient petroleum supply to consumers on a regular basis. The OPEC also aims at generating stable income to the oil producers and ensure equal capital returns to all financiers investing in the petroleum industry. At present, the organization has a total member strength of 12.

OPEC: Historical Facts

It was under the initiative of Venezuela that the OPEC witnessed its origin in 1949. In fact, the origin of OPEC can officially be traced back to September 10–14th, 1960, when its foundation as a standing body on inter-governmental levels was laid by Saudi Arabia, Venezuela, Iran, Kuwait and Iraq, the 6 founding states. It was during this time that the first meeting on petroleum policies was held among these 6 founding states.

Activities performed by OPEC:

  • Coordination of policies related to petroleum, among the different member-countries
  • Examine the existing conditions of the global oil market and predict future activities to support stabilization of the petroleum market
  • Take effective decisions to match petroleum productions with the generated demands
  • Assure the petrol consumers with steady oil supply
  • Facilitate the oil producers to obtain fair return rates on their respective investments
  • Overall stabilization of the oil market

    Economy of the OPEC:

    OPEC's decision regarding the total production of oil is mainly based upon the alterations in the value of the American Dollars against other international currencies, as US Dollars act as determinants of the petroleum sales on a global basis. With the introduction of Euro, Iraq's decision to pay for its petrols in Euros than in American Dollars somewhat forced OPEC to accept Euro as its oil trading currency.

    However, the decisions taken by OPEC immensely influenced the worldwide petroleum prices, especially at the time of the energy crisis in 1973, when OPEC stopped all oil shipments to the western nations. This led to a four times increase in the petroleum price, which continued for around 5 months (October 1973 to March 1974). Thereafter, the prices of crude oil was unanimously enhanced to about 10%. It was also during this period that the OPEC member-countries supported a fresh global economic order introduced by the alliance of the principal oil producers. Following the First OPEC Summit, there was a call for a fair and steady price of oil, which may satisfy the need of both producers and consumers.


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