Why is it in the news?
- Angola has decided to withdraw from the Organization of the Petroleum Exporting Countries (OPEC).
OPEC
- Established in 1960 at the Baghdad Conference by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- Other members include Algeria, Equatorial Guinea, Gabon, Libya, Nigeria, the Republic of the Congo, and the United Arab Emirates.
- OPEC’s primary goal is to coordinate and unify petroleum policies among member countries.
- Aims to secure fair and stable prices for petroleum producers and ensure an efficient, economic, and regular supply of petroleum to consuming nations.
- OPEC’s headquarters is located in Vienna, Austria.
Significance of OPEC
- OPEC possesses more than 80% of the world’s total crude oil reserves.
- OPEC+ (OPEC and 10 other major oil-exporting nations, including Russia) represents around 40% of the world’s oil production.
- Oil prices are primarily determined by demand and supply dynamics. OPEC utilizes a spot or future sale mechanism for price regulation. (Spot Prices: Represent the cost of buying or selling oil immediately; Oil Futures: Contracts where parties agree to exchange a set amount of oil at a predetermined price on a specific date).
- OPEC uses Brent Crude as a benchmark for assessing the quality of crude oil.
- Another major benchmark is WTI (West Texas Intermediate).
Role of OPEC+
- OPEC+ is a coalition of OPEC and 10 other major oil-exporting nations, including Russia.
- Together, OPEC+ plays a significant role in influencing global oil production and prices.
- OPEC+ collectively controls a substantial portion of the world’s oil production, impacting global energy markets.
- OPEC’s influence extends globally, affecting energy policies and economies worldwide.
