The Organization of the Petroleum Exporting Countries (OPEC, /ˈoʊpɛk/ OH-pek) is an

organization enabling the co-operation of leading oil-producing countries in order to

collectively influence the global oil market and maximize profit. It was founded on 14
September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia,
and Venezuela). The organization, which currently comprises 12 member countries,
accounted for an estimated 30 percent of global oil production.[3] A 2022 report further
details that OPEC member countries were responsible for approximately 38 percent of
it.[4] Additionally, it is estimated that 79.5 percent of the world's proven oil reserves are
located within OPEC nations, with the Middle East alone accounting for 67.2 percent of
OPEC's total reserves.[5][6]
In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil
production in favor of oil-producing states and away from an oligopoly of dominant Anglo-
American oil firms (the "Seven Sisters").[7] In the 1970s, restrictions in oil production led to a
dramatic rise in oil prices with long-lasting and far-reaching consequences for the global
economy. Since the 1980s, OPEC has had a limited impact on world oil-supply and oil-
price stability, as there is frequent cheating by members on their commitments to one
another, and as member commitments reflect what they would do even in the absence of
OPEC.[8] However, since 2020, OPEC countries along with non-OPEC participants had
helped in stabilising oil markets after COVID19 pandemic resulted in a collapse in oil
demand. This has allowed oil markets to remain stable relative to other energy markets that
experienced unprecedented volatility.[9]
The formation of OPEC marked a turning point toward national sovereignty over natural
resources. OPEC decisions have come to play a prominent role in the global oil-market and
in international relations. Economists have characterized OPEC as a textbook example of
a cartel[10] (a group whose members cooperate to reduce market competition) but one
whose consultations may be protected by the doctrine of state immunity under international
law.[11]
Former OPEC Secretary-General Mohammad Sanusi Barkindo has clarified the role of the
organization with his statement: "OPEC is neither a monopoly nor a cartel, but a platform
for stability in oil markets, serving the interests of producers, consumers, and the global
economy."[12] This aligns with OPEC's declared objective to coordinate and synchronize the
oil policies of its member states. The organization is committed to stabilizing and ensuring
equitable pricing for oil producers, securing a consistent and cost-effective supply of oil to
consumer countries, and providing a reasonable return on investments for those involved in
the petroleum sector.[13]
Current OPEC members are Algeria, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya,
Nigeria, the Republic of the Congo, Saudi Arabia, the United Arab Emirates and
Venezuela. Meanwhile, Angola, Ecuador, Indonesia, and Qatar are former OPEC
members.[14] A larger group called OPEC+, consisting of OPEC members plus other oil-
producing countries, formed in late 2016 to exert more control on the global crude-oil
market.[15] Canada, Egypt, Norway, and Oman are observer states.
On December 10, 2016, the Joint OPEC and non-OPEC Producing Countries' Ministerial
Meeting took place, leading to the signing of the Declaration of Cooperation (DoC). The
DoC is an agreement signed in 2017 by the OPEC+ member countries. Its primary
objective is to foster collaboration and promote stability in the global oil market. Providing a
framework for OPEC and non-OPEC countries, the DoC aims to work together towards
achieving a balanced and sustainable market. Through production adjustments, regular
meetings, and information sharing, the signatories of the DoC strive to stabilize oil prices,
prevent fluctuations, and ultimately benefit oil producers and consumers. The remarkable
success achieved through this unprecedented level of cooperation has led to multiple
extensions of the agreement, highlighting the significance of international collaboration and
collective action in addressing the complexities of the oil market.[16][17]

Organization and structure[edit]

In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil
production in favor of oil-producing states and away from an oligopoly of dominant Anglo-
American oil firms (the Seven Sisters). Coordination among oil-producing states within
OPEC made it easier for them to nationalize oil production and structure oil prices in their
favor without incurring punishment by Western governments and firms. Prior to the creation
of OPEC, individual oil-producing states were punished for taking steps to alter the
governing arrangements of oil production within their borders. States were coerced militarily
(e.g. in 1953, the US-UK-sponsored a coup against Mohammad Mosaddegh after he
nationalized Iran's oil production) or economically (e.g. the Seven Sisters slowed down oil
production in one non-compliant state and ramped up oil production elsewhere) when acted
contrary to the interests of the Seven Sisters and their governments.[7]
The organisational logic that underpins OPEC is that it is in the collective interest of its
members to limit the world oil supply in order to reap higher prices.[8] However, the main
problem within OPEC is that it is individually rational for members to cheat on commitments
and produce as much oil as possible.[8]
Political scientist Jeff Colgan has argued that OPEC has since the 1980s largely failed to
achieve its goals (limits on world oil supply, stabilized prices, and raising of long-term
average revenues).[8] He finds that members have cheated on 96% of their
commitments.[8] The analysis spans over the period 1982–2009.[18] To the extent that when
member states comply with their commitments, it is because the commitments reflect what
they would do even if OPEC did not exist. One large reason for the frequent cheating is that
OPEC does not punish members for non-compliance with commitments.[8]
In June 2020, all countries participating in the OPEC+ framework collectively agreed to the
introduction of a Compensation Mechanism aimed at ensuring full conformity with and
adherence to the agreed-upon oil production cuts. This initiative aligns with one of OPEC's
stated objectives: to maintain a stable oil market, which, notably, has been relatively more
stable than other energy commodities.[19][20]
Leadership and decision-making[edit]
See also: List of Secretaries General of OPEC

OPEC Conference delegates

at Swissotel, Quito, Ecuador, December 2010
The OPEC Conference is the supreme authority of the organisation, and consists of
delegations normally headed by the oil ministers of member countries. The chief executive
of the organisation is the OPEC secretary general. The conference ordinarily meets at the
Vienna headquarters, at least twice a year and in additional extraordinary sessions when
necessary. 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.[21] However, since Saudi Arabia is by far the largest and most-profitable oil exporter
in the world, with enough capacity to function as the traditional swing producer to balance
the global market, it serves as "OPEC's de facto leader".[22]