Opep Members Structure and History Explained

OPEC members have a rich history dating back to 1960 when the organization was formed by 5 founding countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.

The original purpose of OPEC was to coordinate the oil policies of its member countries and to provide a collective voice in international oil markets.

OPEC's membership has expanded over the years to include 14 countries from the Middle East, Africa, and Latin America.

OPEC has 13 active members, and Saudi Arabia is by far the largest producer, contributing almost one-third of total OPEC oil production.

Saudi Arabia produces enough oil on its own to materially impact the world's supply, giving it more authority and influence than other countries.

The organization's main goal is to limit the world oil supply to reap higher prices, but members often cheat on commitments to produce as much oil as possible, which has led to frequent non-compliance.

In fact, political scientist Jeff Colgan has found that OPEC members have cheated on 96% of their commitments since the 1980s.

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OPEC's lack of punishment for non-compliance is a major reason for the cheating, and it's only recently introduced a Compensation Mechanism to ensure full conformity with oil production cuts.

Here's a list of OPEC members, including their joined year, location, and oil production in 2019:

OPEC was formed in September 1960 at the Baghdad Conference in Iraq, with five founding members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The organization's headquarters was originally located in Geneva, Switzerland, but was later moved to Vienna, Austria in 1965.

By 1969, OPEC had 10 member countries, and by 1975 it had 13. The group's influence grew significantly over time, particularly during the oil crisis of the 1970s when it imposed an oil embargo on several countries.

Only one nation, Gabon, has left OPEC entirely, ending its 20-year membership in 1995. Ecuador and Indonesia suspended their memberships for 15- and 7-year periods, respectively.

Here's a list of countries that have joined OPEC over the years:

OPEC's oil exports represent about 60 percent of the total petroleum traded internationally, giving the organization significant influence over global oil prices.

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OPEC has 13 active members, with Saudi Arabia being the largest producer, contributing almost one-third of total OPEC oil production. Saudi Arabia has more authority and influence than other countries due to its ability to produce enough oil to impact the world's supply.

The organization's members are divided into Founder Members, Full Members, and Associate Members. The Founder Members include the original five countries that joined OPEC in 1960, which are Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.

Some of the notable members of OPEC include Algeria, which joined in 1969, and the United Arab Emirates, which joined in 1967. Other members include Angola, which joined in 2007, and Gabon, which joined in 1975 but left in 1995 before rejoining in 2016.

Here's a list of OPEC members, along with the year they joined and the location:

OPEC has a total of 13 active member countries, with Saudi Arabia being the largest producer, accounting for almost one-third of total OPEC oil production.

The organization has three types of member states: Founder Members, Full Members, and Associate Members. The original five countries that founded OPEC are considered Founder Members.

To become a Full Member, a country must have a substantial net export of crude petroleum and fundamentally similar interests to those of Member Countries. This requires a majority of three-fourths of Full Members, including the concurring votes of all Founder Members, to accept the application.

OPEC's membership has changed over the years, with countries like Indonesia and Ecuador leaving and rejoining the organization. Currently, 13 countries are part of OPEC, with the most recent additions being Angola in 2007 and Equatorial Guinea in 2017.

Here's a list of OPEC member countries, including the year they joined and their location:

Note that some countries, like Indonesia, have been part of OPEC in the past but are no longer members.

OPEC has a strong commitment to improving the availability and reliability of oil data. They collaborated with five other international organizations in April 2001 to launch the Joint Oil Data Exercise.

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This initiative has grown to include seven partners, with the Global Energy and Clean Fuels (GECF) joining in 2014. This expansion enabled JODI to cover nearly 90% of the global market for natural gas.

OPEC publishes the "World Oil Outlook" annually, starting from 2007. This comprehensive analysis presents medium- and long-term projections for global oil supply and demand.

Their "Annual Statistical Bulletin" and "Monthly Oil Market Report" provide regular updates on the oil industry.

OPEC's mission is to coordinate and unify the petroleum policies of its Member Countries, ensuring a stable oil market and a steady income for producers. This mission is crucial for the organization's members, as it helps them get a reasonable price for their oil.

OPEC has three main goals that align with its mission. Its first goal is to keep prices stable, with a target price range of between $70 and $80 per barrel. If prices drop below this target, OPEC members agree to restrict supply to push prices higher.

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To achieve price stability, OPEC members agree to produce only enough oil to meet demand, rather than pumping as much as possible to maximize national revenue. This approach helps prevent a price war among individual oil-exporting countries.

OPEC's second goal is to reduce oil price volatility. To achieve this, the organization responds to changes in the market by adjusting its production levels. For example, in July 2008, oil prices hit an all-time high of $143 per barrel, and OPEC responded by increasing production to bring prices down.

OPEC's third and final goal is to become the world's oil supply swing producer. This involves responding to shortages or surpluses by increasing or decreasing supply as needed. In 1990, OPEC replaced the oil lost during the Gulf Crisis, and in 2011, it increased production during the crisis in Libya.

Here are OPEC's three main goals summarized:

The OPEC Statute is the foundation of the organization's membership structure. It's divided into three categories: Founder Members, Full Members, and Associate Members.

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Founder Members are the original five countries that formed OPEC. These countries have a special status within the organization.

To become a Full Member, a country must submit an application and be accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members. This is a significant hurdle for new countries to overcome.

Associate Members are countries that don't meet the requirements for Full Membership but can still be admitted under special conditions. This category provides a pathway for countries with similar interests to participate in OPEC's activities.

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OPEC's influence on the oil market is a complex phenomenon. OPEC's market share sank from approximately 50 percent in 1979 to less than 30 percent in 1985.

The organization has also taken steps to improve market information, which is crucial for a natural-resource industry that requires careful planning. This is especially evident in the way OPEC has improved the quality and quantity of information available about the international oil market.

Saudi Arabia's strategic measures to regulate oil prices have had profound economic repercussions, including a dramatic decrease in its revenues from $119 billion in 1981 to $26 billion by 1985.

The oil crisis of the late 1970s and early 1980s was a pivotal moment in the history of the oil market. In response to high prices and disruptions in oil supplies, industrial nations began to reduce their dependence on OPEC oil.

Electric utilities worldwide switched from oil to coal, natural gas, or nuclear power, and national governments initiated research programs to develop alternatives to oil. The result was a significant decline in the demand for OPEC oil.

By 1986, daily worldwide demand for oil had dropped by 5 million barrels, and non-OPEC production had risen by an even larger amount. OPEC's market share sank from approximately 50% in 1979 to less than 30% in 1985.

To combat falling revenue, Saudi Arabia pressed OPEC for audited national production quotas in 1982, but other OPEC nations failed to comply. Saudi Arabia then slashed its own production, but even this proved ineffective.

Saudi Arabia's revenues dramatically decreased from $119 billion in 1981 to $26 billion by 1985, leading to significant economic strain. The Kingdom's debt doubled, reaching 100% of the Gross Domestic Product.

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The "free-riding" oil exporters that had previously failed to comply with OPEC agreements finally began to limit production in 1986, based on negotiated national quotas. This led to an increase in oil prices.

Here's a list of OPEC members, their joined year, location, and oil production in 2019:

Oil prices at brokers are influenced by a select group of countries.

The biggest OPEC members who influence daily pricing are Saudi Arabia, Iraq, United Arab Emirates, Iran, Kuwait, Nigeria, Angola, and Algeria.

These countries are mostly located in the Middle East and Africa, with no members in Asia.

The United Kingdom, including the East of England, doesn't have OPEC membership.

OPEC has significantly improved the quality and quantity of information available about the international oil market.

The smooth functioning of the natural-resource industry requires months and years of careful planning, and having reliable market information is essential for that.

OPEC members have been able to cooperate productively to provide this information, which is a notable achievement.

The biggest OPEC members who influence daily pricing are Saudi Arabia, Iraq, United Arab Emirates, Iran, Kuwait, Nigeria, Angola, and Algeria.

These countries are located in the Middle East, Africa, and South America, and their cooperation is crucial for the oil market.

OPEC has a complex relationship with international relations, with some viewing it as a cartel and others as a force for market stabilisation. OPEC was founded in 1960 to coordinate petroleum policies among its member countries.

The organisation's objectives and actions have diverged considerably from those of the World Trade Organization, but OPEC has not been involved in any disputes related to competition rules. OPEC members prefer to describe their organisation as a modest force for market stabilisation.

OPEC's ability to influence global oil prices through collective action is often undermined by widespread cheating within the organisation. Each member nation individually tends to discount its price and exceed its production quota, eroding OPEC's collective power.

The US Energy Information Administration and the Oxford Dictionary of Energy Science both describe OPEC as an intergovernmental organisation that aims to secure a regular supply of oil to consuming countries at a fair price. OPEC's stated objective is to 'coordinate and unify the petroleum policies of member countries'.

Despite popular sentiment against OPEC, the organisation has maintained a degree of worldwide competition due to non-OPEC energy suppliers holding a substantial market share. This competition is a key factor in OPEC's ability to influence global oil prices.

The OPEC-Russia oil alliance is a partnership between OPEC and a 10-country oil alliance led by Russia. This alliance was endorsed on July 2, 2019, with a three-year charter of cooperation to promote continued ministerial and technical dialogue.

Together, they produce almost half the world's oil output, making them a significant force in the global oil market. Iran opposes the deal because it would give Saudi Arabia and Russia dominance over the organization.

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The alliance would continue OPEC's regular meetings, but the Russia-led group would also attend. Iran would prefer that the two groups only meet when there is a crisis.

The partnership aims to promote cooperation and stability in the global oil market, which would benefit producers, consumers, investors, and the global economy.

OPEC's spare capacity is a crucial indicator of the world oil market's ability to respond to potential crises. This is defined as the volume of production that can be brought on within 30 days and sustained for at least 90 days.

The International Energy Agency (IEA) estimated that OPEC's effective spare capacity was 3.5 million barrels per day in November 2014, which would increase to a peak of 4.6 million barrels per day in 2017.

OPEC's spare production buffer was stretched thin by November 2015, as Saudi Arabia and its neighbors pumped at near-record rates, reducing the spare capacity available to the market.

The IEA's assessment highlights the importance of spare capacity in maintaining the stability of the global oil market.

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In December 2018, OPEC agreed to cut 1.2 million barrels per day, with members cutting 800,000 bpd and allies cutting 400,000 bpd.

This decision aimed to return prices to $70 a barrel by early fall 2019, as predicted by analysts. However, commodities traders had bid prices down due to higher U.S. supplies flooding the market and slowing global growth cutting into demand.

OPEC maintained the cuts until the first quarter of 2020, as agreed upon in July 2019. The organization also continued to withhold 2% of global oil supply, a policy formed in November 2016.

OPEC+ is a loose grouping of countries, including non-OPEC member countries, that participate in the organization's initiatives such as voluntary supply cuts. This includes countries like Russia, which voluntarily agreed to cut production in 2016.

The OPEC+ Alliance Members List includes countries like Oman, Sudan, Brunei, and Russia, among others.

Here is a list of notable OPEC+ deals and strategic responses:

The OPEC Conference is the supreme authority of the organisation, and consists of delegations normally headed by the oil ministers of member countries.

The conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary.

It generally operates on the principles of unanimity and "one member, one vote", with each country paying an equal membership fee into the annual budget.

Saudi Arabia serves as "OPEC's de facto leader" due to its status as the largest and most-profitable oil exporter in the world, with enough capacity to function as the traditional swing producer to balance the global market.

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OPEC made a crucial decision on December 7, 2018, to cut 1.2 million barrels per day, with members agreeing to cut 800,000 bpd and allies cutting 400,000 bpd. This move aimed to return prices to $70 a barrel by early fall 2019.

Analysts predicted the cut would have a significant impact on the market, and in November, average global prices for Brent crude oil had dropped to under $58 bpd. Commodities traders had bid prices down, believing higher U.S. supplies would flood the market with supply at the same time slowing global growth would cut into demand.

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On July 1, 2019, members agreed to maintain the cuts until the first quarter of 2020, showing a commitment to stabilizing the market. This decision was a key step in OPEC's efforts to regain control over oil prices.

In 2017, OPEC agreed to continue withholding 2% of global oil supply, a policy that began in 2016 when it cut production by 1.2 million barrels per day. As of January 2017, OPEC's production would be 32.5 mbd, still above its average 2015 level of 32.32 mbpd.

OPEC's share of the global oil market fell from 44.5% in 2012 to 41.8% in 2014, largely due to a 16% increase in U.S. shale oil production. This led to a significant drop in oil prices, from $119.75 in April 2012 to $38.01 in December 2015.

Here are some key dates in OPEC's recent decisions:

In December 2017, Russia and OPEC agreed to extend the production cut of 1.8 mbpd until the end of 2018, further solidifying their partnership. This move was a key step in OPEC's efforts to stabilize the market and regain control over oil prices.

The founding of OPEC marked a pivotal moment in the history of the oil industry, as it began oil-producing nations' efforts to assert their sovereignty over their resources and gain more control over global oil markets.

Many oil-producing nations in the Middle East, South America, and Africa were experiencing the exploitation of their oil reserves by foreign companies, often under unfavorable terms, leading to a desire to regain control over their valuable natural resources.

By forming a unified front, oil-producing countries believed they could negotiate better deals with multinational oil companies and gain more favorable terms in production agreements, which ultimately led to the creation of OPEC.

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Iraqi President Saddam Hussein was pushing OPEC to end overproduction and send oil prices higher in 1990, ahead of his invasion of Kuwait.

The invasion led to a short-term supply disruption, but oil prices subsided quickly after the conflict.

OPEC lost two members in the 1990s: Ecuador withdrew in 1992 due to concerns about its quota and the annual membership fee, and Gabon suspended its membership in 1995 for similar reasons.

The 1997-1998 Asian financial crisis triggered lower demand and caused oil prices to fall back to 1986 levels.

Joint diplomacy between OPEC, Mexico, Norway, and others achieved a gradual slowing of oil production, helping to stabilize prices.

In 2001, OPEC, Norway, Mexico, Russia, Oman, and Angola agreed to cut production by 2 million barrels a day for six months starting in January 2002.

OPEC contributed 1.5 million barrels a day to the production cuts.

The International Energy Agency (IEA) and OPEC held their first joint workshop on energy issues in June 2003.

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The early 2000s were a wild ride for OPEC, with oil prices plummeting to $10 a barrel in 1998, but then skyrocketing to $37 a barrel in 2002, a 270% increase.

This volatility was largely due to the 9/11 attacks, which led to a significant decrease in oil demand. The subsequent invasion of Iraq in 2003 further disrupted the global oil market.

The price of oil continued to rise, reaching $147 a barrel in 2008, a 400% increase from 2002. This surge was largely driven by speculation and a weak US dollar.

The global financial crisis of 2008-2009 led to a sharp decline in oil prices, which dropped to $32 a barrel in 2009. This downturn was a result of reduced global demand and increased oil production.

In 2014, a global oil surplus, or glut, emerged, causing a significant drop in oil prices.

Oil prices plummeted from over $100 per barrel in 2014 to below $50 per barrel in 2016, a decline of over 50%.

This led to a sharp increase in oil production, particularly in the United States, as producers took advantage of the low prices.

US oil production rose from 6.5 million barrels per day in 2014 to over 9 million barrels per day in 2017.

The oil glut also led to a decline in the number of drilling rigs in operation, from over 1,900 in 2014 to around 400 in 2016.

However, as prices recovered in 2017, the number of drilling rigs began to rise again, reaching over 900 by the end of the year.

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