OPEC : Members, Objectives, Functions & OPEC+

By K Balaji|Updated : December 27th, 2022

OPEC full form is Organization of the Petroleum Exporting Countries. It is a permanent, intergovernmental organization. It was created at the Baghdad Conference in September 1960 by Venezuela, Iran, Iraq, Saudi Arabia, and Kuwait. Currently, OPEC has 13 members. Its headquarters are in Vienna, Austria.OPEC aims to smoothen the supply of oil in an effort to set up the oil price in the world market that would avoid fluctuations, that would affect the economics of both purchasing and producing countries. 

The membership of OPEC is open to any country that is a big exporter of oil. OPEC is an important topic that comes under the international relations segment of the UPSC Syllabus. That’s why UPSC aspirants must take the help of the OPEC UPSC notes and required study material to fetch good marks from this section.

Table of Content

What is OPEC?

OPEC or Organization of the Petroleum Exporting Countries was founded by five countries namely the republic of Iran, Kuwait, Iraq, Saudi Arabia, and Venezuela.

  • The countries that joined later are Ecuador (1973), Gabon (1975), Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Angola (2007), Equatorial Guinea (2017) and Congo (2018).
  • The main motive of OPEC is to unify the petroleum policies among the member countries to secure stable prices for petroleum producers, regular supply to the petroleum-consuming nations, and a good return to those investing in this sector.

History of OPEC Countries

  • Representatives from Venezuela, Iran, Kuwait, Iraq, and Saudi Arabia met in Baghdad.
  • In the meeting, they discussed ways to increase the price of crude oil produced by them and the ways to respond to the unilateral actions of international oil companies.
  • This led to the formation of OPEC, to get the best price possible from major oil companies.
  • It was strongly opposed by the US, and Saudi Arabia, along with other Arab and non-Arab oil producers.
  • Originally, Beirut or Baghdad was the initial choice of Arab nations for the headquarters of OPEC. But it was objected to by Venezuela. On the basis of neutral grounds, Geneva(Switzerland) was chosen.
  • As Switzerland did not extend diplomatic assurances, it was shifted to Vienna(Austria) on 1st September 1965.

The eight other Members, who later joined the five Founding Members were:

  1. Qatar (1961)
  2. Indonesia (1962)
  3. Socialist People's Libyan Arab Jamahiriya (1962)
  4. UAE (1967)
  5. Algeria (1969)
  6. Nigeria (1971)
  7. Ecuador (1973–1992)
  8. Gabon (1975–1994)

OPEC Members (Current)

Below we have listed the current members of the OPEC

Current OPEC Members

Angola

UAE

Venezuela

Saudi Arabia

Republic of Congo

Libya

Nigeria

Kuwait

Iran

Iraq

Gabon

Equatorial Guinea

Algeria

        __

Objectives of OPEC

The objectives of OPEC are

  • To Unify and coordinate petroleum policies among its members, in order to achieve stable and just prices for petroleum producers.
  • To ensure an efficient, economic, and regular supply of crude oil to consuming nations, with an adequate return on investment.

Functions of OPEC

The functions of OPEC include:

  • The OPEC Member Countries regulate their oil production so that it brings security to the oil retail market and helps manufacturers get a good return on their money.
  • The policy is also created in a habit to guarantee that consumer nations receive regular supplies of oil.
  • The ministry of energy and hydrocarbon affairs meets twice a year to review the status of the international market and decide upon steps that will bring security to the oil market.
  • Other meetings are also held by the Member Countries to address other topics of interest, such as those of petroleum and economic experts, as well as specialized groups such as environmental committees and panels.

What is OPEC+?

OPEC+ is a grouping of oil-producing nations. It is made up of OPEC members and 10 other members. Other members include South Sudan, Azerbaijan, Brunei, Kazakhstan, Bahrain, Malaysia, Mexico, Oman, Russia, and Sudan.

Why did OPEC plus come into existence?

  • When Russia concluded the Vienna Agreement in 2016, the Russian leadership believed that higher oil prices would increase its financial capacity.
  • In the case of Saudi Arabia, turning this ad hoc coalition into a formal group provides it protection against future oil-market turbulence.
  • For Russia, the formalization of this group helps expand its influence in the Middle East.
  • However, both aimed to drop oil prices in order to hit US shale producers, who have continued to benefit from OPEC production cuts by expanding their market share.

Concerns with OPEC

The concerns with OPEC are as follows

  • The restrained production by OPEC will not help bring down oil prices that have soared to record highs.
  • The rise in global inflation is also due to the rise in oil prices. It could dampen demand in the economy, thus slowing the economic recovery process.

India and OPEC

  • India is the world’s 3rd biggest importer of oil.
  • 84% of its demand is met through imports.
  • The three-fifth of it is met mainly by West Asian oil-bearing nations.
  • As one of the largest crude oil-consuming countries, India is concerned about unilateral actions by oil-producing countries.
  • Unilateral actions by OPEC have the potential to undermine consumption-led recovery and more so hurt consumers, especially in our price-sensitive market.
  • With India’s crude imports projected to rise robustly, it hopes that OPEC would not squeeze supply unfairly, and made a pitch for sweeter deals in terms of lower prices and longer credit periods.

OPEC UPSC

OPEC is one of the important international institutions. UPSC aspirants should know that the Important International Institutions come under the GS Paper-2 of the UPSC Syllabus. That’s why it is essential for the aspirants to cover OPEC properly so they would be able to answer all the questions asked about this particular topic in both UPSC Prelims and UPSC Mains exams. We have added all the crucial information related to OPEC in this article, and candidates must go through it to strengthen their basic knowledge of OPEC.

Other Important UPSC Notes

Statue Of Equality UPSC Notes

Inclusive Growth UPSC Notes

Disaster Management UPSC Notes

Land Reforms in India UPSC Notes

One Nation One Ration Card Scheme UPSC Notes

Climate Change UPSC Notes

Cyclone UPSC Notes

Operation Twist UPSC Notes

Comments

write a comment

FAQs on OPEC Organization Of The Petroleum Exporting Countries

  • OPEC full form is the Organization of the Petroleum Exporting Countries. It was formed with the objective to coordinate the petroleum policies among its members, to achieve stable petroleum prices for the petroleum producers.

  • Qatar joined the organization in 1961, but it left OPEC on 1 January 2019. It wanted to focus on natural gas production.

  • Venezuela is part of OPEC. It is the only country in South America to be part of OPEC.

  • Russia is not a member of OPEC

  • OPEC has 14 Members. These countries are Equatorial Guinea, Congo, Kuwait, Libya, UAE, Nigeria, Saudi Arabia, Angola, Ecuador, Gabon, Iran, Iraq, and Algeria.

  • Canada is among some of the world’s biggest oil producers who are not part of OPEC, including Russia, China, Norway, Oman, Mexico, and the U.S. These countries had responded to OPEC’s attempt to control world oil prices by pumping more oil and achieving greater market share.

  • It is Venezuela. It has proven oil reserves of 17.9% of the world's total. Saudi Arabia has proven oil reserves of 15.7% of the world total, and Canada has proven oil reserves of 10% of the world total.

  • OPEC stands for Organization of the Petroleum Exporting Countries. The main objective of OPEC is to coordinate and unify petroleum policies with its member countries.

  • OPEC plus or Organization of the Petroleum Exporting Countries Plus is a loosely affiliated entity that consists of 13 OPEC members and major 10 OPEC oil-exporting nations.

  • The OPEC controls oil prices by keeping them high and lowering the supplies when the demand for oil slumps. The OPEC plus tailors demand and supply to maintain balance in the market.

Follow us for latest updates