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Opec Organization of Petroleum Exporting Countries


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Organization of Petroleum Exporting Countries

Any country with substantial exports and same petroleum interests are eligible to join

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Opec Organization of Petroleum Exporting Countries

  2. 2. ABOUT OPEC Headquarters - Vienna, Austria Official languages – English Member states – 12 member countries Leaders – - President RostamGhasemi -Secretary General Abdallah el-Badri
  3. 3. ABOUT OPEC Establishment - Baghdad, Iraq - Statute September 10–14, 1960in effect January 1961 Currency - Indexed as USD-per-barrel
  4. 4. BRIEF HISTORY ON OPEC 1960’s Five Founding Members seek to assert rights in oil market dominated by Seven Sisters, Secretariat moved from Geneva to Vienna 1965 1970’s OPEC rose to international prominence during this decade, as its Member Countries took control of their domestic petroleum industries and acquired a major say in the pricing of crude oil on world markets. On two occasions, oil prices rose steeply in a volatile market, triggered by the Arab oil embargo in 1973 and the outbreak of the Iranian Revolution in 1979
  5. 5. HISTORY The 1980s After reaching record levels early in the decade, prices began to weaken, before crashing in 1986, responding to a big oil glut and consumer shift away from this hydrocarbon. OPEC’s share of the smaller oil market fell heavily and its total petroleum revenue dropped below a third of earlier peaks, causing severe economic hardship for many Member Countries. The 1990s Prices moved less dramatically than in the 1970s and 1980s, and timely OPEC action reduced the market impact of Middle East hostilities in 1990– 91. But excessive volatility and general price weakness dominated the decade, and the South-East Asian economic downturn and mild Northern Hemisphere winter of 1998–99 saw prices back at 1986 levels
  6. 6. HISTORY The 2000s An innovative OPEC oil price band mechanism helped strengthen and stabilise crude prices in the early years of the decade. But a combination of market forces, speculation and other factors transformed the situation in 2004, pushing up prices and increasing volatility in a well-supplied crude market. Oil was used increasingly as an asset class. Prices soared to record levels in mid-2008, before collapsing in the emerging global financial turmoil and economic recession. OPEC became prominent in supporting the oil sector, as part of global efforts to address the economic crisis.
  7. 7. OPEC Member Countries Founding Members: Saudi Arabia, Iran, Kuwait, Iraq, and Venezuela Full Members: Qatar, Libya, Indonesia, United Arab Emirates, Algeria, and Nigeria Founding Members have veto power over admission of new members (otherwise all countries have equal rights) Any country with substantial exports and same petroleum interests are eligible to join
  8. 8. OPEC’s Principle Objectives Coordinate and unify oil policies of Member Countries Determine best means of safeguarding individual and collective interests Stabilize prices in international oil markets Provide efficient and economic supply of petroleum to consuming nations Obtain a fair return on capital to those investing in oil industry
  9. 9. How OPEC Functions The OPEC Conference: supreme authority, meets generally in March and September Heads of Delegation: official representatives of each Member Country Board of Governors: directs management, draws up budget Secretariat: carries out executive functions, consists of Secretary General and Research Division
  10. 10. OPEC and the Oil Market OPEC does not control the oil market, but it does have a strong influence on the market OPEC Member Countries produce 41percent of the world’s crude oil
  11. 11. SOME FACTS Indonesia withdrew in 2008 after it became a net importer of oil, but stated it would likely return if it became a net exporter again encompasses OPEC actions both before and after the outbreak of hostilities in October 1973, and concludes that “OPEC countries were only staying even by dramatically raising the dollar price of oil.” OPECs ability to control the price of oil has diminished somewhat since then, due to the subsequent discovery and development of large oil reserves in Alaska, the North Sea, Canada, the Gulf of Mexico, the opening up of Russia, and market modernization
  12. 12. SOME FACTS As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production, affording them considerable control over the global market
  13. 13. THANK YOU