OPEC: Full Form, Countries, OPEC+, Members, Functions, OPEC UPSC

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).

OPEC UPSC Notes

Over the years, the organization has expanded to include 13 members from around the world, including several in Africa and Latin America. 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

The Organization of the Petroleum Exporting Countries, or OPEC, has been a major player in the global oil market since its establishment in 1960. We have discussed the origins and evolution of OPEC below.

• 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)

Current OPEC Members

Comprising 13 members, OPEC has a major influence on the production, supply, and pricing of crude oil, which has significant implications for global economies and energy markets.  The members of OPEC consist of a diverse group of nations, each with their own unique political, and economic perspective. The current members of OPEC are:

OPEC Members
Angola	UAE
Venezuela	Saudi Arabia
Republic of Congo	Libya
Nigeria	Kuwait
Iran	Iraq
Gabon	Equatorial Guinea
Algeria	__

Objectives of OPEC

Since its establishment, OPEC has evolved into a powerful force in the global energy sector, influencing the price and supply of oil and gas around the world.  The major objective of OPEC is to Unify and coordinate petroleum policies among its members, in order to achieve stable and just prices for petroleum producers. It also aims to ensure an efficient, economic, and regular supply of crude oil to consuming nations, with an adequate return on investment.

Functions of OPEC

OPEC has various functions, including its role in setting oil prices, and production quotas and promoting cooperation among member nations. Let’s discuss the major functions of OPEC in detail below.

• 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

Many concerns have been raised about the organization’s power and influence, particularly with regard to the impact of its decisions on global economies, the environment, and energy security. 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 growth process. Additionally, other concerns include the organization’s ability to manipulate oil prices, its influence on geopolitical relationships, and its disregard for climate change and renewable energy.

India and OPEC

India, the world’s third-largest oil importer, has had a complex relationship with the Organization of the Petroleum Exporting Countries (OPEC). On the one hand, India relies heavily on OPEC countries for its oil imports, with more than 80% of its crude oil needs being met by OPEC member nations. Let’s analyze the relationship between India and OPEC.

• 84% of India’s oil 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 an important topic that finds its mentions under the Important International Institutions in GS-2 syllabus. Additionally, OPEC’s role in shaping global energy markets and the geopolitics of oil makes it an important topic for students of international relations, and economics. Overall, a thorough understanding of OPEC’s history, members, objectives, and policies can prove to be invaluable for aspirants during their UPSC Exam Preparation.

OPEC MCQs

Question: Which of the following countries is NOT a member of OPEC? a. Saudi Arabia b. Iran c. Russia d. Iraq

Answer: c. Russia

Question: When was OPEC founded? a. 1955 b. 1960 c. 1975 d. 1980

Answer: b. 1960

Question: Which of the following OPEC countries is the largest producer of oil? a. Saudi Arabia b. Iraq c. Kuwait d. Iran

Answer: a. Saudi Arabia

Question: What is the primary objective of OPEC? a. To maintain stable oil prices b. To promote the use of renewable energy c. To limit oil production to protect the environment d. To increase oil prices at any cost

Answer: a. To maintain stable oil prices

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