OPEC and OPEC+ Countries, Objectives and Functions

OPEC stands for the Organization of the Petroleum Exporting Countries. OPEC goal is to coordinate and unify the petroleum policies of member countries. Know all about Objectives and Functions of OPEC+ Countries.

Table of Contents

Context: OPEC+ decided to extend significant oil output cuts into 2025. Recently the Brazilian government has approved its entry in OPEC+.

Organization of the Oil Exporting Countries (OPEC)

It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
HQ: Vienna, Austria.
Objective: To co-ordinate and unify petroleum policies among Member Countries, to secure fair and stable prices for petroleum producers.
Members (12): Saudi Arabia, UAE, Iran, Iraq, Kuwait, Algeria, Equatorial Guinea, Gabon, Libya, Nigeria, Republic of the Congo and Venezuela.

Important Facts about OPEC
Headquarters	Vienna, Austria.
Foundation	Founded in 1960 in Baghdad by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela in response to oil companies’ dominance.
Aim	Coordinating petroleum policies and securing fair and stable prices.
Membership	Membership has seen changes over time due to economic and political factors. New members must be approved by a three-fourths majority of existing members, including all founding members.
Objectives and Functions	Coordinates petroleum policies to stabilise markets. Sets production quotas to balance supply and demand. Conducts biannual market reviews to inform policy decisions.

OPEC+

OPEC Plus 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.
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.

Facts

79.5% (1,243.52 billion barrels) of the world’s proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 67.2% of the OPEC total.

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)

Fact

Angola: Became an OPEC member in 2007 and withdrew its membership effective January 1, 2024. This means that, currently, the Organization has a total of 12 Member Countries