OPEC - Organisation of Petroleum Exporting Countries - Formation & Working startegies
The factors leading into formation of OPEC are -
1) Oil companies - Monopoly of seven major oil companies - five US companies , one each
English company and English - Dutch company.
2) Venezuela oil related activities- Due to movement by increasing oil taxes. In fact, this was
the first step towards creating OPEC.
3) Movement for Nationalisation of oil industry by Mid - East countries.
4) Reduction in oil prices- Around 1959, US companies unilaterally reduced price by 18 cents
to 25 cents per Barrel.
5) Arab countries insistence- for creation of organisation for protecting their interest.
FORMATION OF OPEC-
The Organisation of Petroleum Exporting Countries (OPEC) is a permanent inter governmental organisation created at Baghdad conference on Sept. 10 - 14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia & Venezuela. It had its headquarters in Geneva, Switzerland in first five years of its existence.
It has a total 15 member countries, all major oil exporting countries. These nations produce about 44% of world crude oil and more than 20% of natural gas production. OPEC's oil exports consists
of about 60% total petroleum traded internationally.
OPEC is to co - ordinate the Petroleum policies and to provide member states with technical and economic aid. OPEC strategy is prepared every five years under the guidance of Deputy Ministers
of Petroleum and Energy of member countries. The strategy analyzes factors which may affect
the organisation efforts to ensure market stability and fair prices as also trends that may have a
impact of security of world oil demand.
OPEC has control over world oil prices by over producing & under producing. It has significant
influence on the price of oil. In case, member countries are unsatisfied with the price of oil, it is in their interest to cut supply so price rises. Two primary factors that impact oil prices are - Demand
and Supply & market sentiment. Price is calculated since one Barrel consists of 42 Gallons
(standard unit of measurement). So, divide day's crude price by 42. If rate is 100 dollars per Barrel,
then about 2.38 dollars of price per Gallon comes from crude oil.
At the present rate of production, stock of oil left is for 53 years (as per BP statistics). 82% of
world's proven oil reserves are located in OPEC member countries.
1) Oil companies - Monopoly of seven major oil companies - five US companies , one each
English company and English - Dutch company.
2) Venezuela oil related activities- Due to movement by increasing oil taxes. In fact, this was
the first step towards creating OPEC.
3) Movement for Nationalisation of oil industry by Mid - East countries.
4) Reduction in oil prices- Around 1959, US companies unilaterally reduced price by 18 cents
to 25 cents per Barrel.
5) Arab countries insistence- for creation of organisation for protecting their interest.
FORMATION OF OPEC-
The Organisation of Petroleum Exporting Countries (OPEC) is a permanent inter governmental organisation created at Baghdad conference on Sept. 10 - 14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia & Venezuela. It had its headquarters in Geneva, Switzerland in first five years of its existence.
It has a total 15 member countries, all major oil exporting countries. These nations produce about 44% of world crude oil and more than 20% of natural gas production. OPEC's oil exports consists
of about 60% total petroleum traded internationally.
OPEC is to co - ordinate the Petroleum policies and to provide member states with technical and economic aid. OPEC strategy is prepared every five years under the guidance of Deputy Ministers
of Petroleum and Energy of member countries. The strategy analyzes factors which may affect
the organisation efforts to ensure market stability and fair prices as also trends that may have a
impact of security of world oil demand.
OPEC has control over world oil prices by over producing & under producing. It has significant
influence on the price of oil. In case, member countries are unsatisfied with the price of oil, it is in their interest to cut supply so price rises. Two primary factors that impact oil prices are - Demand
and Supply & market sentiment. Price is calculated since one Barrel consists of 42 Gallons
(standard unit of measurement). So, divide day's crude price by 42. If rate is 100 dollars per Barrel,
then about 2.38 dollars of price per Gallon comes from crude oil.
At the present rate of production, stock of oil left is for 53 years (as per BP statistics). 82% of
world's proven oil reserves are located in OPEC member countries.
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