Organization Of The Petroleum Exporting Countries (OPEC) Definition
The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization established to coordinate, unify and solidify petroleum policies among member countries. OPEC was established in Baghdad, Iran in September 1960. When it was established, it had five member countries but the membership of this organization has grown to 14 countries.
In addition to coordinating petroleum policies, OPEC was founded to provide analysis on the developments in the oil and petroleum market and to also render technical assistance to member countries. OPEC is a permanent organization that has its headquarters in Vienna, Austria.
A Little More on What is the Organization Of The Petroleum Exporting Countries (OPEC)
OPEC was created 1960 as a formal agreement between 5 oil-producing countries namely; Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. At the moment OPEC comprises 14 oil-producing countries.
This organization has the responsibility of setting trends in the oil market and regulating the supply of oil by member countries. OPEC plays a crucial role in the economies of many countries of the world and not just the oil-producing countries. OPEC regulates the international oil markets and ensures that price fluctuations are reduced to the barest minimum.
OPEC comprises 14 member countries namely; Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Congo, Angola, Ecuador, Nigeria, Gabon, United Arab Emirates, Algeria, Libya, and Equatorial Guinea.
There are certain statutes and ethics that guide OPEC. Countries must also meet certain criteria before that can become members. Ideally, a member country of OPEC must be a oil-producing country or a substantial exporter of oil. Ultimately, member countries of OPEC must share the ideals and values of the organization, they must also commit to abide by the existing principles.
Not all oil-producing countries are members of OPEC, for instance, the United States, Russia and China are not members, despite that they are part of the largest oil-producing nations.
OPEC’s core policy is to coordinate and unify the petroleum policies of member countries in a way that they do not destabilize the international oil market. This organization also regulates the supply of petroleum and set prices to prevent fluctuations that might affect the economy of the oil-producing country and that of the buyer.
However, the development of technology has reduced the impact of OPEC in oil prices, this led to an increase in oil production and a decrease in prices, making the international oil market more difficult for OPEC to regulate.