OPEC

OPEC, the Organization of the Petroleum Exporting Countries is an international organization. Since 1965, the headquarters of OPEC has been in Vienna, Austria. OPEC was established in Baghdad, Iraq on 10–14 September 1960.

Its work is to “coordinate and unify the petroleum policies” of its members, and also to “ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry”.

According to the United States Department of Energy Energy Information Administration (EIA), OPEC crude oil production is an important factor affecting global oil prices. OPEC sets production targets for its member nations and generally, when OPEC production targets are reduced, oil prices increase. Projections of changes in Saudi production result in changes in the price of crude oil.

OPEC was formed in 1960 when the international oil market was largely dominated by multinational companies known as the ‘seven sisters’. The formation of OPEC was a turning point in state control over natural resources. In the 1960s OPEC made sure that oil companies could not unilaterally cut prices. In December 2014, OPEC and the oil men were named in the top 10 most influential people in the shipping industry by Lloyds.

History

OPEC was established at a conference in Baghdad, Iraq in September 1960. Prior to the OPEC, the oil market in the world was dominated by a cluster of aggressive Western oil corporations referred to as the Seven Sisters. These companies included ExxonMobil, Chevron, Texaco, Gulf Oil, Shell, and BP. The oil-producing nations desired greater control of their own natural resources and the income they received out of the same.

The five founding members included:

• Iran
• Iraq
• Kuwait
• Saudi Arabia
• Venezuela

The group relocated to Vienna, Austria in 1965 where it is located.

Mission and Goals

The principal function of OPEC is to coordinate and unify the oil policies of the members. Its three main goals are:

• Stable Prices: To maintain fair prices of oil in order to prevent its rising and falling too fast.
• Constant Revenue: To ensure that the oil producing countries receive a constant supply of funds to develop their economies. Constant Supply: This is in order to ensure that the countries who require oil are always able to purchase it.

How it Works

OPEC leaders have a minimum of two meetings every year to discuss the global economy. When the oil in the world is too much and the price is falling they might consent to reduce production (produce less oil) to allow the price to recover. In case the price is too expensive, they can produce more in the aim of reducing the price to the consumer.

Members

12 countries are members of OPEC. The names of these countries are: Note: Some countries like Qatar and Angola have left the group in recent years to focus on their own energy goals. And on 28 April 2026, United Arab Emirates has accounced to leave OPEC from 1 May 2026

What is OPEC+?

OPEC began collaborating with other non-member states in 2016, such as Russia, Mexico and Kazakhstan. This larger alliance is known as OPEC+. This larger alliance is known as OPEC+. They jointly own approximately half of the oil resources in the world, which further gives them more power in control of the global energy prices. Together, OPEC+ countries produce about half of the world’s oil supply, which gives them significant influence over global energy prices.

Why is it Important?

The significance of OPEC is that there are numerous applications of oil, which can be useful in the form of gasoline in automobiles, heating in residential houses, and plastic products. Since the members of OPEC control approximately 80 percent of the proven oil reserves on earth, their actions can determine the amount of money people worldwide will pay at the gas pumps.

Aims

Member countries of the OPEC came together to form this international organization with several aims. Some of the aims are:

• To protect the interest of the member countries.
• To make sure that the price of petroleum products do not change much.
• To make certain a regular supply of petroleum oil to other countries.
• To make sure that member countries get the right amount of money from sale of oil products.
• To decide policies to follow relating to production and sale of petroleum oil.

However, OPEC has not always been able to achieve all these aims.