The Organisation of Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organisation which was formed at the Baghdad Conference of September 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, United Arab Emirates, Algeria and Nigeria. Saudi Arabia is the biggest producer of oil and the dominant partner in the cartel.
C.40% Share in Global Oil Supplies :
The OPEC supplies over 40 per cent of the world|s oil need. Between them the OPEC members have around three-fourths of the World|s proven oil reserves. Excluding Iraq OPEC has a total production capacity of 28.7 million barrels per day (Mb/d). The global demand for oil is around 80 Mb/d.
D.OPEC's Control of Global Oil Prices :
Controlling Oil Prices by Restricting Production: Analysts point out that OPEC tries to control global oil prices by restricting the production. When the cartel feels that the oil prices are low, the Oil Ministers of OPEC nations impose production ceilings. Lower supplies send oil prices up. In 1973, OPEC|s squeeze on supply of oil quadrupled oil prices almost overnight.
E.OPEC's Price Band Mechanism :
The OPEC introduced a price band mechanism that targeted a price range of $22-28 per barrel for the OPEC basket, with automatic adjustments to quotas if the range was breached. Over the last one year, the OPEC basket price has remained well above its stated price limits.
F.OPEC a Divided House :
OPEC has been a divided house with a big gap between advocates of production cuts and higher prices and moderates advocating high production and low prices.
G.Limitations of OPEC|s Control Exposed :
The spurt in global oil prices exposed the limitations of the OPEC. Several members of the OPEC could barely manage their quotas, let alone increase production to stabilise the spurt in the oil prices.
2. Non-OPEC Oil suppliers :...