The Organisation of the Petroleum Exporting Countries (OPEC) is a cartel of 13 major oil-producing nations that collectively account for 44% of global oil supply and around 81% of proven reserves. Founded in 1960, OPEC aims to manage the global supply of oil in an effort to control prices of oil on the world market, avoiding fluctuations that could significantly impact on their economies.
While headquartered in Vienna, Austria is not a member of OPEC. The 13 members comprise founders Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, as well as Algeria, Angola, Congo, Equatorial Guinea, Gabon, Libya, Nigeria and the UAE.
OPEC’s ability to control global oil prices has been hampered by the arrival of fracking technology in the United States, which has significantly increased their oil production capacity. However, most OPEC members, including informal leader Saudi Arabia, are able to produce oil much more cheaply than the US. This has seen OPEC collectively increase production in the past in an attempt to make American shale production unviable.
OPEC’s collective position has been substantially bolstered by the formation of OPEC+, a loose coalition of OPEC nations and 10 other oil-producing nations. The most significant of these is Russia, alongside Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, South Sudan and Sudan. This brings their control to 50% of global oil supply and 90% of proven reserves.
The gas price crisis that saw global energy prices rocket in late 2021 and early 2022 has seen the influence of oil prices on energy markets grow more profound. The US Biden Administration has blamed OPEC for contributing to the energy crisis by refusing to boost production in response to increased demand. Instead, OPEC has chosen to maintain relatively modest outputs, resulting in the highest wholesale oil costs since 2014 and continuing to provide bullish influence on gas markets.