Organization of the Petroleum Exporting Countries (OPEC) – Members, Objectives, OPEC+ | UPSC Notes

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Organization of the Petroleum Exporting Countries (OPEC) – Members, Objectives, OPEC+ | UPSC Notes

Organization of the Petroleum Exporting Countries (OPEC)

Table of Contents

The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organization that coordinates and unifies the petroleum policies of its member countries.
It aims to secure fair and stable prices for petroleum producers, ensure an efficient supply of oil to consumers, and provide a fair return on investments.
It generally operates on the principles of unanimity and “one member, one vote”, with each country paying an equal membership fee into the annual budget.

Historical Background

Founded in September 1960 at the Baghdad Conference by 5 countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
Headquarters: Initially Geneva, Switzerland (1960–1965), later moved to Vienna, Austria.
Created in response to the dominance of “Seven Sisters” (Western oil companies).

Objectives of OPEC

To co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers
Ensure an efficient, economic and regular supply of petroleum to consuming nations
Ensure a fair return on capital to those investing in the industry.

Membership

Current Members (12): Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates (UAE), Venezuela.
Founding Members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela
Former Members: Angola(withdrew in 2024), Indonesia, Ecuador, and Qatar.

Do you Know?

The OPEC Statute distinguishes between the Founder Members and Full Members – those countries whose applications for membership have been accepted by the Conference.
The Statute stipulates that “any country with a substantial net export of crude petroleum, which has fundamentally similar interests to those of Member Countries, may become a Full Member of the Organization, if accepted by a majority of three-fourths of Full Members, including the concurring votes of all Founder Members.”
The Statute further provides for Associate Members which are those countries that do not qualify for full membership, but are nevertheless admitted under such special conditions as may be prescribed by the Conference.

OPEC Secretariat

It is the executive organ of the Organization of the Petroleum Exporting Countries (OPEC).
Located in Vienna, 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.
The Secretariat consists of the Secretary General, who is the Organization’s Chief Executive Officer, as well as such staff as may be required for the Organization’s operations.
The Secretariat was originally established in 1961 in Geneva, Switzerland.

OPEC+

OPEC+ is an alliance of the 12 OPEC members and 10 non-OPEC oil-producing countries formed in 2016.
It was created to strengthen cooperation in stabilizing global oil markets, especially after the fall in oil prices due to rising US shale production.
Members of OPEC+: It comprises OPEC countries plus Azerbaijan, Bahrain, Brunei, Kazakhstan, Russia, Mexico, Malaysia, South Sudan, Sudan, and Oman.
Recent Event:Brazil has joined OPEC+ as an observer, allowing it to engage in global oil discussions without committing to production cuts.

Do you know?

OPEC+ allots a quota to each of its member countries depending on oil reserves and production capabilities.
It seeks to maintain high oil prices as well as manage the successful functioning of the group as a cartel.
OPEC alone controls about 35 per cent of the global oil supply. Collectively OPEC+ controls approximately more than 45 per cent of the world oil supply.
Source-IDSA
80% of the world’s proven crude oil reserves are located in the grouping Member Countries
Its Publication: World Oil Outlook

The OPEC Fund for International Development (the OPEC Fund)

It is a multilateral development finance institution established in 1976.
It has 12 Member Countries: Algeria, Ecuador, Gabon, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates and Venezuela.
It is the only globally mandated development institution that provides financing from member countries to non-member countries exclusively.
The organization works in cooperation with developing country partners and the international development community to stimulate economic growth and social progress in low- and middle-income countries around the world.
The OPEC Fund was established by the member countries of OPEC in 1976 with a distinct purpose: to drive development, strengthen communities and empower people.
Its work is people-centered, focusing on financing projects that meet essential needs, such as food, energy, infrastructure, employment (particularly relating to MSMEs), clean water and sanitation, healthcare and education.

FAQs

1. What is OPEC and when was it formed?

OPEC is a permanent intergovernmental organization founded in September 1960 in Baghdad by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. It aims to coordinate petroleum policies and stabilize oil markets.

2. Where is the headquarters of OPEC located?

The OPEC Secretariat is headquartered in Vienna, Austria since 1965. It was earlier based in Geneva.

3. Who are the current members of OPEC?

As of 2024, OPEC has 12 members: Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, UAE, and Venezuela.

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