OPEC and OPEC+: Member Countries, Objectives and Functions

Context: The United Arab Emirates has decided to exit OPEC, marking a significant change in global oil dynamics amid the ongoing West Asia conflict.

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.]
• Contribution to oil Production: accounts for 38 per cent of global oil production, according to a 2022 report

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.
• Reason for Formation: To counter falling oil prices by coordinating production cuts or increases globally.
• Key Role: Together, OPEC+ controls over 40% of global oil supply and holds significant influence on international oil prices.
• 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)

Reasons for UAE Exit From OPEC

UAE, OPEC’s third-largest producer, joined the oil-producing cartel in 1967.

• Production Freedom vs OPEC Quotas: OPEC quotas restricted the UAE despite its capacity to expand production to ~5 million barrels/day by 2027.
• UAE aims to monetise reserves quickly (e.g. producing more now rather than saving for long-term high prices).
• Saudi–UAE Differences: Tensions have been simmering between the UAE and Saudi Arabia for a while, but were partially covered by their shared anger with Tehran. However, a fragile consensus broke in their response to the Iran War:
  • Response Against Iran: Abu Dhabi has been pushing Saudi Arabia and Qatar to launch joint counterattacks against Iran. But Riyadh was urging the US to defeat Iran.
  • Geopolitical Tensions: Differences over regional conflicts (e.g. disagreements in Yemen, Sudan and response to Iran attacks) weakened the UAE-Saudi relations.
    • Approach in Yemen: Saudi Arabia wants a united and stable Yemen under one government to protect its border, while the United Arab Emirates supports local groups and separatists to gain influence in southern regions and ports.
    • Difference in Sudan: Saudi Arabia supports ceasefire and negotiations (e.g. hosting Jeddah peace talks to stop fighting), while the United Arab Emirates is seen as backing one faction (RSF) to secure influence on the ground.
  • Saudi–Pakistan Factor: UAE dissatisfaction with Pakistan’s alignment with Saudi Arabia (e.g. Pakistan’s neutral mediation between the U.S. and Iran seen as weak by the UAE).
  • Leadership Rivalry: Saudi Arabia wants to remain the main leader in the Gulf, while the UAE is trying to act independently and increase its global influence.
• Frustration with Lack of Support: The UAE faced major drone and missile attacks but lacked strong regional backing (e.g. over 2,200 attacks on the UAE during the Iran conflict, yet no unified Gulf response)
• Closer Alignment with U.S.: Exit may improve ties with U.S. (e.g. aligning with Donald Trump, who has criticised OPEC).

Implication for India

• Lower Oil Prices (Positive): Increased UAE production may reduce global oil prices (e.g. easing India’s import bill and inflation pressure).
• Energy Security Benefits: More supply flexibility (e.g. India can access cheaper and diversified oil sources).

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