The Organization of the Petroleum Exporting Countries (OPEC): History,

Structure, and Impact on Global Oil Markets

Abstract:

The Organization of the Petroleum Exporting Countries (OPEC) is a powerful international

organization that has a significant impact on global oil markets. This research academy provides an
overview of OPEC's history, structure, and impact on the global oil industry. The academy
discusses the origins of OPEC, its membership, decision-making process, and the role it plays in
shaping global oil prices. The academy also examines OPEC's impact on the global economy, its
relationship with other oil-producing countries, and the challenges it faces in the current energy
landscape.

Introduction:

The Organization of the Petroleum Exporting Countries (OPEC) was founded in 1960 with the aim
of coordinating and unifying the petroleum policies of its member countries. OPEC is made up of
13 member countries, which collectively account for over 40% of global oil production and over
70% of the world's "proven" oil reserves. OPEC's influence on the global oil industry has been
significant, with the organization playing a major role in setting oil prices and shaping the energy
landscape.

History:

OPEC was founded in Baghdad, Iraq, in 1960 by five founding members: Iran, Iraq, Kuwait, Saudi
Arabia, and Venezuela. The organization was created in response to the dominance of Western oil
companies in the global oil industry, and the desire of the founding members to control their own
oil resources. Over the years, OPEC has grown to include eight additional member countries:
Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya, Nigeria, and the United Arab Emirates.

Here is a list of the countries and the year they joined OPEC:

1. Iran - 1960

2. Iraq - 1960

3. Kuwait - 1960
4. Saudi Arabia - 1960

5. Venezuela - 1960

6. Qatar - 1961

7. Indonesia - 1962 (suspended its membership in 2016)

8. Libya - 1962

9. United Arab Emirates (UAE) - 1967

10. Algeria - 1969

11. Nigeria - 1971

12. Ecuador - 1973 (withdrew in 1992, rejoined in 2007, and withdrew again in 2020)

13. Gabon - 1975 (withdrew in 1995, rejoined in 2016, and withdrew again in 2020)

14. Congo - 2018

The distribution of oil production among OPEC member countries varies, with some countries
producing more than others. Saudi Arabia is the largest producer of oil among OPEC member
countries, followed by Iraq, Iran, the UAE, and Kuwait. Here is a list of the OPEC member
countries and their approximate share of OPEC's oil production as of 2021:

1. Saudi Arabia - 32%

2. Iraq - 14%

3. Iran - 11%

4. United Arab Emirates (UAE) - 9%

5. Kuwait - 8%

6. Venezuela - 6%

7. Nigeria - 4%

8. Angola - 4%

9. Libya - 3%

10. Algeria - 3%
11. Congo - 2%

12. Equatorial Guinea - 1%

13. Gabon - 1%

It's important to note that OPEC countries regularly adjust their production levels in response to
market conditions and their own economic needs. OPEC also sets production targets for its member
countries to help balance global oil supply and demand and maintain stable prices.

Structure:

OPEC is a complex organization with a unique decision-making process. The organization is

governed by a Board of Governors, which is made up of representatives from each member country.
The Board of Governors meets twice a year to discuss policy and make decisions. OPEC's day-to-
day operations are managed by a Secretariat, which is based in Vienna, Austria. The Secretariat is
responsible for conducting research, preparing reports, and implementing the decisions of the Board
of Governors.

Impact on Global Oil Markets:

OPEC's impact on global oil markets is significant. The organization plays a major role in setting
oil prices through its production quotas. OPEC has the ability to reduce or increase its production
levels, which can have a significant impact on global oil prices. OPEC's decisions can also
influence the behavior of other oil-producing countries, such as the United States and Russia.
OPEC's actions are closely monitored by the global oil industry, and its decisions can have far-
reaching effects on the global economy.

Challenges:

OPEC faces a number of challenges in the current energy landscape. The rise of shale oil in the
United States has led to increased competition for OPEC, as the United States has become a major
oil producer in its own right. In addition, the transition to renewable energy sources such as wind
and solar power presents a long-term threat to the oil industry. OPEC must navigate these
challenges while also balancing the interests of its member countries.

OPEC (Organization of the Petroleum Exporting Countries) is an intergovernmental organization

that accounts for a significant portion of the world's oil production and reserves. The factors that
control oil and gas prices in OPEC include:
Global demand: The level of global demand for oil and gas is one of the most significant factors
that influence prices. If demand for oil and gas increases, prices tend to rise, and if demand falls,
prices will tend to fall.

Production levels: OPEC countries control a significant portion of the world's oil production, and
therefore, their production levels have a significant impact on prices. When OPEC countries
increase production, the supply of oil and gas increases, which can lead to lower prices, and when
they decrease production, prices tend to rise.

Political factors: Political instability or conflict in oil-producing countries can disrupt production,
leading to supply shortages and price increases. Additionally, changes in government policies, such
as taxes or regulations, can also influence prices.

Exchange rates: The exchange rate of the US dollar and other major currencies can also affect oil
and gas prices. Most oil transactions are conducted in US dollars, so a strong US dollar can lead to
lower prices, while a weak US dollar can lead to higher prices.

Competition from alternative energy sources: As the world moves towards cleaner and more
sustainable sources of energy, competition from alternative energy sources such as solar, wind, and
hydroelectric power can also impact oil and gas pricesas they become more popular and affordable.

OPEC's production targets: OPEC sets production targets for its member countries to control the
supply of oil and gas in the market. If OPEC agrees to decrease production, it can help to increase
prices, and if it agrees to increase production, it can lead to lower prices.

Inventory levels: The levels of crude oil and gas inventories can influence prices. When
inventories are high, it indicates a surplus of supply, which can lead to lower prices, and when
inventories are low, it indicates a shortage of supply, which can lead to higher prices.

Weather: Extreme weather conditions, such as hurricanes or cold snaps, can disrupt production and
transportation of oil and gas, leading to supply shortages and price increases.

Conclusion:

The Organization of the Petroleum Exporting Countries (OPEC) is a powerful international

organization that has a significant impact on global oil markets. OPEC's history, structure, and
impact on the global oil industry have been discussed in this research academy. While OPEC faces
a number of challenges in the current energy landscape, the organization remains a major player in
the global oil industry and will continue to shape the energy landscape for years to come.