Organization of the Petroleum Exporting Countries

International Business
 Prepared By
Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com

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 Introduction
• OPEC (Organization of the
Petroleum Exporting
Countries) is an oil cartel
whose mission is to
coordinate the policies of the
oil-producing countries. The
goal is to secure a steady
income to the member states
and to secure supply of oil to
the consumers.
 History
• OPEC was formed at a time when
the international oil market was
largely separate from centrally
planned economies, and was
dominated by multinational
companies. OPEC's ‘Policy
Statement' states that there is a
right of all countries to exercise
sovereignty over their natural
resources. Because OPEC is an
organisation of countries (not oil
companies), individual members
have sovereign immunity for their
actions, meaning that OPEC is not
regarded as being subject to
"Antitrust" or Competition Law in
the normal way.
 Growth
• In the 1970s, OPEC began
to gain influence and
steeply raised oil prices
during the 1973 oil crisis in
response to US aid to Israel
during the Yom Kippur
War. It lasted until March
1974. OPEC added to its
goals the selling of oil for
socio-economic growth of
the poorer member
nations, and membership
grew to 13 by 1975.
 Growth
• In the 1980s, the price of oil was
allowed to rise before the adverse
effects of higher prices caused
demand and price to fall. The
OPEC nations, which depended on
revenue from oil sales,
experienced severe economic
hardship from the lower demand
for oil and consequently cut
production in order to boost the
price of oil. During this time,
environmental issues began to
emerge on the international
energy agenda. Lower demand for
oil saw the price of oil fall back to
1986 levels by 1998–99.
 Growth
• In the 2000s, a combination of
factors pushed up oil prices
even as supply remained high.
Prices rose to then record-high
levels in mid-2008 before falling
in response to the 2007
financial crisis . OPEC's summits
in Caracas and Riyadh in 2000
and 2007 had guiding themes of
stable energy markets,
sustainable oil production, and
environmental sustainability.
 Objectives
• OPEC's objective is to co-
ordinate and unify
petroleum policies among
Member Countries, in order
to secure fair and stable
prices for petroleum
producers; an efficient,
economic and regular supply
of petroleum to consuming
nations; and a fair return on
capital to those investing in
the industry.