OPEC
Channel: the aleatoric learning channel
Date: 2021-10-29

As of September 2018, the 13 member countries accounted for an estimated 44 percent of global oil production and 81.5 percent of the world's "Proven" oil reserves, giving OPEC a major influence on global oil prices that were previously determined by the so-called "Seven Sisters" grouping of multinational oil companies. In response to a wave of oil nationalizations and the high prices of the 1970s, industrial nations took steps to reduce their dependence on OPEC oil, especially after prices reached new peaks approaching US$40/bbl in 1979-1980 when the Iranian Revolution and Iran-Iraq War disrupted regional stability and oil supplies. As one oil analyst summarized succinctly: "When the price of something as essential as oil spikes, humanity does two things: finds more of it and finds ways to use less of it."To combat falling revenue from oil sales, in 1982 Saudi Arabia pressed OPEC for audited national production quotas in an attempt to limit output and boost prices. These developments led in turn to a plunge in US oil import requirements, a record volume of worldwide oil inventories, and a collapse in oil prices that continued into early 2016.In spite of global oversupply, on 27 November 2014 in Vienna, Saudi oil minister Ali Al-Naimi blocked appeals from poorer OPEC members for production cuts to support prices. Another analyst claims that "It's about assaulting the Western economy, especially America's." In order to ward of from the oil exporters price war which can make shale oil production uneconomical, US may protect its crude oil market share by passing the NOPEC bill. In August 2021, U.S. President Joe Biden's national security adviser Jake Sullivan released a statement calling on OPEC to boost oil production to "Offset previous production cuts that OPEC imposed during the pandemic until well into 2022." On 28 September 2021, Sullivan met in Saudi Arabia with Saudi Crown Prince Mohammed bin Salman to discuss the high oil prices. According to the U.S. Energy Information Administration, OPEC's combined rate of oil production represented 44% of the world's total in 2016, and OPEC accounted for 81.5% of the world's "Proven" oil reserves. In addition to formal OPEC members, 10 additional oil exporting countries, led by Russia, form the OPEC cartel, which since 2016 cooperate in fixing the global crude oil prices by agreeing to production quotas that keep global production below demand/consumption. OPEC countries are criticized as encouraging unnecessary excess capital investment in the global oil sector instead of promoting cheaper oil production at lower capital investment. North Sea Brent Crude Oil is the leading benchmark for Atlantic basin crude oils, and is used to price approximately two-thirds of the world's traded crude oil.