BUSINESS ECONOMICS

Presented by: AKSHIT ARORA(201) YASH BHAYANI(202) AKHIL SAWANT(209) ANKIT MEHTA(217)

Overview             Introduction to OPEC Rise of OPEC Functioning of OPEC OPEC«Controller of oil market??? CRUDE OIL PRICES How does OPEC oil production affect oil prices? OPEC a Cartel or a Political body? The First Oil Shock The Second Oil Shock The Persian Gulf War 2008 Crisis Non-OPEC Production .

OPEC has maintained its headquarters in Vienna since 1965.   .Introduction To OPEC  The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organization. Oil is the vital key to development for the member countries. and hosts regular meetings among the oil ministers of its member Countries.

Country Algeria Angola Ecuador ** Iran * Iraq * Kuwait * SP Libyan AJ Nigeria Qatar Saudi Arabia * United Arab Emirates Venezuela* Joined OPEC 1969 2007 rejoined 2007 1960 1960 1960 1962 1971 1961 1960 1967 1960 Location Africa Africa South America Middle East Middle East Middle East Africa Africa Middle East Middle East Middle East South America * founder Members ** Ecuador joined OPEC in 1973. 1992-Oct. suspended its membership from Dec. 2007 .

 Seek ways and means of ensuring the stabilization of prices in international oil market.Principal objectives of OPEC  Co-ordinate and unify the petroleum policies of the Member Countries.  Provide regular supply of petroleum to consuming nations .

 OPEC was founded by 5 major oil producing countries namely. Iraq.  It was registered in the United Nations on 6th November 1962.Rise of OPEC  OPEC came into existence on 14h September 1960. Saudi Arabia and Venezuela.  Oil.  OPEC can be considered as ³Cartel´ organization. . with its limited number of suppliers make it the ideal product for cartelization. Kuwait. Iran.

 The Member Countries consider the current situation and forecasts the market fundamentals.  Depending upon their forecast they decide variously to raise or lower their collective oil production in order to maintain stable prices.Functioning of OPEC  Representatives of OPEC Member Countries meet every 6 months to coordinate and unify their petroleum policies. . such as the petroleum demand and supply scenarios.

Common Doubts about OPEC  OPEC«Controller of oil market«???  Does OPEC decide crude oil prices«???  How does OPEC oil production affect oil prices«???  OPEC is a Cartel or a Political body«??? .

65 a barrel. .  Muammar al-Qaddafi¶s seizing of power in military coup in Libya.First oil shock  US pulled out of gold exchange standard.  The Egypt Israeli war of 1973.  Oil embargo against the United States.  Oil prices jump from about $3.  Oil producing states began demanding for more concessions.  Saudi Arabia refused to increase production in order to halt rising prices.00 a barrel to $11.

 Rise of non OPEC countries.  Oil producing states placed a significant portion of their revenue into commercial banks.The Second Oil Shock  Iranian Revolution.  Outbreak of the war between Iran and Iraq in 1980. .  Embargo on Iranian oil.  Increase in interest rates by the developed nations.

 Saudi Arabia expanded its production to meet the global demand. .  In 2005 the prices shoot up to 60$.The Persian Gulf War  Iraq¶s invasion in its fellow OPEC member Kuwait in 1990.  The prices reached to lowest mark of 12$ in 1998.  Removal of both the countries from OPEC.  Iraq's refusal to comply with United Nations resolutions resulted in the continuation of an oil embargo.

U. U.S.  October 19. crude oil was traded for over $79 per barrel. 2006. 2008.  On April 18.02 per barrel.S.  North Korea's successful nuclear test on October 9. light crude surpassed $100 per barrel. light crude rose to $90. .  United States of economic "mismanagement³.  On January 2. 2007.2008 Crisis  In mid 2006. 2008 the price of oil broke $117 per barrel.  Then due to inflation oil reached all time high of $143 on june 2008.

OPEC¶s contribution since 1960 .

Norway 7. United States 3.Non-OPEC Countries  Seven of the world's fifteen largest oil producers are outside of OPEC. Britain  Non-OPEC nations produce nearly 60 percent of total production for the year. They are as follows: 1. Mexico 5. Canada 6. Russia 2. China 4. Brazil 8. .

 United States. Russia and a few other former Soviet states. Mexico and Norway have experienced a decline in production  Whereas there has been significant increases in production from Brazil. Canada. .

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