What is OPEC?
It stands for the Organisation of Petroleum Exporting Countries
Oil is their main or only export
They consist of 12 oil producing countries that include Saudi Arabia, Iran, Venezuela, Iran, Libia, Nigeria
What is OPEC's mission?
Their aim is to coordinate and unify the petroleum policies of its member countries and to ensure the stablisation of oil markets in order to secure:
- A regular supply of petroleum to consumers
- A steady income to producers
- A fair return on capital (i.e.money) for those who are investing in the petroleum industry
How much oil do the OPEC countries have?
The OPEC countries produce around 40% of the world's oil.
These countries hold around 80% of the oil that has been proven to exist.
85% of the reserves are from the Middle East.
What influence does OPEC have on the world markets
- The countries hold large oil reserves
- Their oil exports represent 60% of the crude oil that is traded internationally
- The OPEC countries have a strong influence on the oil market
- They have the ability to reduce or increase their levels of production, however, this level of power is being reduced due to the discovery and development of oil in Alaska, the North Sea, Canada and the opening up of Russia
What happened in 1973?
There was an energy crisis:
- OPEC countries refused to ship out oil to countries in Western Europe who had supported Iran in the Yon Kippur War
- This caused oil prices to increase by 10%
- This led to a world wide recession
WHat happened in the 1980s?
The world wide recession had caused a reduce demand for oil, causing oil prices to fall, but there were also high levels of overproduction amoung OPEC members
What happened in the 1990s?
OPEC was divided by war amoungst its member countries:
- Iraqi invasion of Kuwait
- Iraq and Iran war
This led to an increase in oil prices.
In the late 1990s, the production was reduced, leading to a prompt rise in prices
What happened in the 2000s?
In the 2000s, oil prices surged far higher than those that were targeted by OPEC following events that took place in 2001, as well as the invasion of Afganistan and Iraq:
- In 2001, a weakened US economy and an increase in non-OPEC production led to a sharp increase in prices
- In 2008, there was conflict between OPEC memebers in reductions in productions quotas to boost prices. Saudi Arabia walked out the negotitations that were being made, Despite evenutually agreeing to the reduced production levels, Saudi Arabia still did not allow them because of their concerns that high oil proces will prompt nations to conserve energy and explore alternative sources
How much is OPEC worth?
In 2011, OPEC earned over $1 trillion
What power does OPEC have?
Because the OPEC countries are so oil wealthy, it allows them to be a strategic centre of world politics and economy.
However, they have a bad record of human rights, political stability and complience with international law which is very poor.