OPEC and OPEC+ Countries, Objectives and Functions

Context: OPEC+ decided to extend significant oil output cuts into 2025. Recently, the Brazilian government has approved its entry into OPEC+. Despite low prices, OPEC+ is expected to increase oil production.

Organization of the Oil Exporting Countries (OPEC)

• Organization of the Oil Exporting Countries (OPEC) is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
• HQ: Vienna, Austria.
• Objective: Coordinate and unify petroleum policies among member countries to stabilise oil markets, ensure fair prices for producers, and a regular supply to consumers.
• Current Members of OPEC (12 Countries): Saudi Arabia, UAE, Iran, Iraq, Kuwait, Algeria, Equatorial Guinea, Gabon, Libya, Nigeria, the Republic of the Congo and Venezuela. [Angola withdrew its membership effective 1 January 2024.]

What is OPEC+

OPEC+ was created in 2016 when OPEC countries decided to ally with other oil-producing countries outside the group to cut down the global output of oil.

• Objective: The decision aims to stabilise the market due to modest demand growth, high interest rates, and increasing oil production in the U.S.
• Reason for Formation: To counter falling oil prices by coordinating production cuts or increases globally.
• Key Role: Together, OPEC+ controls over 40% of the global oil supply and holds significant influence on international oil prices.
• Current Market Conditions: Oil prices are hovering around $80 per barrel, which is below the level desired by OPEC+ members to balance their budgets.
• Collaboration with Russia: OPEC+, which includes Russia, continues its strategy of deep oil output cuts that began in late 2022.
• Output Reduction: OPEC+ is reducing its oil production by approximately 5.7% of global demand, amounting to a total cut of 5.86 million barrels per day (bpd).
• Specific Cuts Extension: The group has agreed to extend the 3.66 million bpd cut, initially set to expire at the end of September 2024, to the end of September 2025.
• Gradual Phase-Out: OPEC+ plans to gradually decrease these output restrictions, starting from 2.2 million bpd in October 2024 to the end of September 2025.
• Influence of China: Rising oil inventories in developed economies like China have impacted prices.

Current OPEC+ Members

12 OPEC members and 10 non-OPEC oil-exporting countries.

• Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan and Sudan.
• Major Non-OPEC members: Russia, Kazakhstan, Mexico, Oman, etc.
• Countries like Kazakhstan and the UAE are increasing production, risking friction with leaders like Saudi Arabia.

OPEC Countries List

Here is a list of the 12 OPEC member countries:

• Algeria (1969)
• Congo (2018)
• Equatorial Guinea (2017)
• Gabon (1975)
• Iran (1960)
• Iraq (1960)
• Kuwait (1960)
• Libya (1962)
• Nigeria (1971)
• Saudi Arabia (1960)
• United Arab Emirates (1967)
• Venezuela (1960)

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