OPEC Vs OPEC+

Context: Oil prices jumped by close to 10% for its biggest daily gain in almost six months after news of a highly effective vaccine against COVID-19 and Saudi Arabia’s assurance that an OPEC+ oil output deal could be adjusted to balance the market.

  • Oil prices also found support from a weaker U.S. dollar on the back of Joe Biden’s victory.

Analysis

  • OPEC+ is a group of 23 oil-producing nations, made up of the 13 members of the Organization of Petroleum Exporting Countries (OPEC), and 10 other non-OPEC members.
  • The OPEC bloc is nominally led by Saudi Arabia, the group’s largest oil producer, while Russia is the biggest player among the non-OPEC countries.
  • The format was born in 2017 with a deal to coordinate oil production among the countries in a bid to stabilize prices.
  • Since then, the group has reached deals for members to voluntarily cut and ramp up production in response to changes in global oil prices.
  • OPEC accounts for around one-third of the world’s oil supply, with the non-OPEC members bringing the total share of global oil covered by the deal to just under half.
  • The world’s largest energy producer, the U.S., is not part of the deal, nor is China or other leading Western producers such as the U.K., Canada and Norway.

OPEC: Member Countries

  • The Organization of the Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq, in 1960 by five countries namely the Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
  • They were to become the Founder Members of the Organization.
  • These countries were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975), Angola (2007), Equatorial Guinea (2017) and Congo (2018).
  • Ecuador suspended its membership in December 1992, but rejoined OPEC in October 2007, but decided to withdraw its membership of OPEC effective 1 January 2020.
  • Indonesia suspended its membership in January 2009, reactivated it again in January 2016, but decided to suspend its membership once more at the 171st Meeting of the OPEC Conference on 30 November 2016.
  • Gabon terminated its membership in January 1995. However, it rejoined the Organization in July 2016.
  • Qatar terminated its membership on 1 January 2019.
  • This means that, currently, the Organization has a total of 13 Member Countries.
  • 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.

Non-OPEC Members

  • Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan. 

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