OPEC and OECD

Bhinitha Chandrasagaran
KKE 18005
The Organization of Petroleum Exporting
Countries (OPEC)
• OPEC is a permanent, intergovernmental organization composed of 13
major oil-producing countries. It was founded at the Baghdad Conference
on Sept. 10-14, 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
Eight others joined in the intervening years: Qatar (1961), Indonesia (1962),
Libya (1962), United Arab Emirates (1967), Algeria (1969), Nigeria (1971),
Ecuador (1973) and Angola (2007).
• OPEC was formed in response to import quotas on oil.
• OPEC was largely unsuccessful in obtaining higher oil prices during the
1960s. However, in 1973, the organization was able to raise prices by
curtailing production. This has since become OPEC’s main tool for
influencing prices. OPEC controls a sufficient amount of production
worldwide that it can reduce the available supply by cutting production,
resulting in higher prices.
 The wealth of
OPEC nations is
built on the price
of a barrel of oil
The early days
of extraction
meant that Oil
was very
expensive
 The global
economic
recession has
seen oil prices
skyrocket once
more
OPEC Members
Organization for Economic Cooperation and
Development (OECD)
• The OECD works with member countries on matters of finance,
regulatory reform, environmental issues, fiscal policy and other
issues.
• OECD monitors events in member and non-member countries and
prepares projections of economic developments.
• OECD countries can form agreements on matters of mutual interest,
including methods for combating bribery, arrangements for export
credits and procedures for capital movements.
Today, the OECD is a forum of 34
industrialized countries that develops
and promotes economic and social
policies.
 OPEC vs. OECD
• The OECD is quite unlike OPEC.
OPEC is a cartel whose primary
purpose is to exercise control over
oil prices. The OECD is mainly
focused on broad issues of
economic development among its
members.
• The so-called “Seven Sisters,” to
the extent that they were
organized at all, are much closer to
OPEC than is OECD. The reason the
EIA uses the OECD as a prism for
reporting on oil prices is not so
much because it is involved in
determining oil prices as that it is a
convenient way to group the
countries that are not members of
OPEC. Some countries, such as
Russia and China, are not members
of either OPEC or OECD.