Context: Globally oil prices surged, posting the biggest daily rise in nearly a year, after a surprise announcement by OPEC+ to cut more production jolted markets.
The Organization of the Petroleum Exporting Countries and their allies including Russia shook markets by announcing further production cuts of about 1.16 million barrels per day (bpd).
How this price is being raised?
Through intentional cut in the oil supplies by the OPEC+ members.
About Organisation of the Petroleum Exporting Countries (OPEC)
- OPEC is a permanent intergovernmental organisation of 13 oil-exporting developing nations that coordinates and unifies the petroleum policies of its Member Countries.
- In economics terms, OPEC is a cartel (A cartel is an organisation created from a formal agreement between a group of producers of a good or service to control supply or to regulate or manipulate prices).
- OPEC provides more than 70% of the world’s oil requirements.
History
It was created at the Baghdad Conference on September 10–14, 1960, by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Objective
To coordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.
- The OPEC Secretariat is the executive organ of the Organization. Located in Vienna (previously in Geneva), it also functions as the Headquarters of the Organization, in accordance with the provisions of the OPEC Statute. It is responsible for the implementation of all resolutions passed by the Conference and carries out all decisions made by the Board of Governors. It also conducts research, the findings of which constitute key inputs in decision-making.
- OPEC publications: World Oil Outlook and Annual Statistical Bulletin.
- OPEC+ is a group of non-OPEC member countries that also participate in the organisation’s initiatives such as voluntary supply cuts in order to further bind policy objectives between OPEC and non-OPEC members. This loose grouping of countries, known as OPEC+, includes Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
