OPEC:Organisation of Petroleum Exporting CountriesOPECs principal aims are the coordination and unification of the petroleum policies of its Member Countries and the determination of the best means for safeguarding their interests, individually and collectively. The Organization also seeks to devise ways and means of ensuring:an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on theircapital to those investing in the petroleum industry.the stabilisation of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations, due regard being given at all times to the interests of oil producing nations and to the necessity of securing a steady income for them;

OPECThe first move towards the establishment of the Organization of the Petroleum Exporting Countries (OPEC) took place in 1949, when Venezuela approached Iran, Iraq, Kuwait and Saudi Arabia and suggested they exchange views and explore avenues for regular and closer communications between them. The need for closer cooperation became more apparent in 1959 when the international oil companies unilaterally reduced the posted price for Venezuelan crude by 5 and 25 per barrel, and that for Middle Eastern crude by 18 per barrel.It then set up the general agreement on the establishment of an Oil Consultation Commission. In August 1960, the oil companies further reduced the posted prices for Middle East crude by between 10 and 14 per barrel.

OPECAs a result, the First Arab Petroleum Congress, held in Cairo, adopted a resolution calling on oil companies to consult with the governments of the producing countries before unilaterally taking any decision on oil prices. In September 1960, the Government of Iraq invited Iran, Kuwait, Saudi Arabia and Venezuela to a meeting in Baghdad to discuss the reduction in prices of the crudes produced by theirrespective countries. Following this, a conference was held 1014 September 1960 in Baghdad, which was attended by representatives of these five governments. It was this First Conference which established OPEC as a permanent intergovernmental organization.

OPECOPEC rose to international prominence during the 1970s, 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. After reaching record levels early in the 1980s, prices began to weaken, before crashing in 1986, responding to a big oil glut and consumer shift away from this hydrocarbon. OPECs 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. Prices rallied in the final part of the 1980ies, but to around half the levels of the early part, and OPECs share of newly growing world output began to recover.

OPECPrices moved less dramatically in the 1990s than in the 1970s and 1980s, and timely OPEC action reduced the market impact of Middle East hostilities in 199091. But excessive volatility and general price weakness dominated the decade, and the South-East Asian economic downturn and mild Northern Hemisphere winter of 199899 saw prices back at 1986 levelsHowever, a solid recovery followed in a more integrated oil market, which was adjusting to the post-Soviet world, greater regionalism, globalisation, the communications revolution and other high-tech trends. Breakthroughs in producer-consumer dialogue matched continued advances in OPEC/non-OPEC relationsThis was supported by OPEC introducing a group production ceiling divided among Member Countries and a Reference Basket for pricing (quotas, or in official OPEC language, production allocation). OPEC is reluctant to disclose current quotas, on their home page the latest are from 2007.

Saudi Arabia as Swing Producer

OPECAfter 2000, an innovative OPEC oil price band mechanism helped strengthen and stabilize 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. OPECs second and third summits in Caracas and Riyadh in 2000 and 2007 established stable energy markets, sustainable development and the environment as three guiding themes,

OPEC Anniversary 2010Six achievements highlighted for the 50th Anniversary:3 Sustainable development1 Secure and steady supply of oil2 Fifty years old a success in itself4 OPEC and the environment5 Encouraging dialogue and cooperation6 Strengthening of national oil companies

OPECThe following is from the minutes for the meeting in December 2012:Since it is vital to remain vigilant in the face of the uncertainty surrounding the outlook for the worlds major economies, as well as the implications of the enduring weaknesses in the international financial system that are expected to continue to pose downside risks for both the global economy and the oil market, the Conference directed the Secretariat to maintain its close monitoring of developments in supply and demand, as well as non-fundamental factors, such as macroeconomic sentiment and speculative activity, keeping Member Countries abreast of developments at all times.

OPECGabon and Indonesia have left OPEC

OPECPrice: The OPEC Reference Basket (ORB), also referred to as the OPEC Basket is a weighted average of prices for petroleum blends produced by OPEC countries. It is used as an important benchmark for crude oil prices.OPEC produced 41.5 percent of the world's oil in 2010.The major OPEC producers are (2010), Saudi Arabia10.0 MMbbl/day Iran 4.3 UAE 2.8 Kuwait 2.5 Iraq 2.5 Nigeria 2.4

OPEC

The OPEC Reference Basket (ORB)Saharan Blend (from Algeria) EcuadorIran Heavy (from Islamic Republic of Iran) Basra Light (from Iraq) Kuwait Export (from Kuwait) Es Sider (from Libya) Bonny Light (from Nigeria) Qatar Marine (from Qatar) Arab Light (from Saudi Arabia) Murban (from UAE) BCF 17 (from Venezuela)

Reference crudesWhich have we ?OPEC BasketTexas intermediateBrent blend

Reference crudesWhat are the differences in price due to ?Quality:Gravity, hydrocarbons, paraffin, heavy metals,.Distance to marketsCost of transportation determines price CIFe.g. CIF Rotterdam (NL)A light crude with cyclic hydrocarbons is more worth than a light crude with linear hydrocarbonsLight crude: more gasoline => higher valueParaffin wax: bad for refineries => lower value

Who gets what from a litre of oil ? (2010)

OPEC Secretary-General, Abdullah al-Badri. Not content with the split between the OPEC countries and the consuming countries

OPEC meeting 27 November 2014Recording its concern over the rapid decline in oil prices in recent months, the Conference concurred that stable oil prices at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand were vital for world economic wellbeing.

OPEC meeting 27 November 2014Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011.As always, in taking this decision, Member Countries confirmed their readiness to respond to developments which could have an adverse impact on the maintenance of an orderly and balanced oil market.

OPEC meeting 27 November 2014Accordingly, in the interest of restoring market equilibrium, the Conference decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011.As always, in adverse impact on the maintenance of an orderly and balanced oil market. taking this decision, Member Countries confirmed their readiness to respond to developments which could have an Forecast world oil production: 92 mb/d

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