What Does OPEC Do?

The OPEC HQ in Vienna, Austria

OPEC, the organisation of petroleum exporting countries, is one of the most powerful cartels in the world. Collectively it has about three quarters of the worlds discovered and recognised oil reserves. Of all internationally traded oil OPEC produces 58% of it.  



But what does OPEC actually do for its members and for the international economy?

OPEC Consists of Mainly developing countries.

For its members OPEC aims to keep oil prices as high as possible to bring maximum possible revenues and in essence keep the oil trade optimal for everyone in OPEC so they can trade for as long as possible and get the best prices possible. I.e they want to avoid selling large amounts of oil for low prices and it running out in favor of selling moderated amounts for high prices lasting long enough for OPEC countries to develop their non-oil sectors of the economy. It only produces 44% of world crude oil but has 78% of reserves. This means in the future that when other countries cannot produce any more OPEC will hold significant bargaining power which it can use to the advantage of its members.

OPEC Oil Export Revenues

For the international economy OPEC certainly drives prices up which is not a good thing. But it does (apart from the Arab Oil embargo of 1973) keep oil supply stable and ensure reliable trade. It does this by issuing quotas to its members to ensure they meet certain production levels every year. OPEC is in short a dependable and reliable supplier of Oil to the world economy. It needs the world and the world needs it.