The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization that aims to regulate the price and supply of oil in the world market.
OPEC at a Glance
- Full form: Organization of the Petroleum Exporting Countries.
- Founded: 14 September 1960, at the Baghdad Conference.
- Founder members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- Headquarters: Vienna, Austria (since 1965; earlier in Geneva from 1960-65).
- Official language: English.
- Current Secretary-General: Haitham Al Ghais (Kuwait), since August 2022.
Why OPEC Was Founded
- To coordinate and unify petroleum policies of member countries.
- To secure fair and stable prices for petroleum producers.
- To ensure efficient, economic, and regular supply of petroleum to consuming nations.
- To ensure a fair return on capital for investors in the industry.
- To reduce dependence on major Western oil companies (the “Seven Sisters”) that had historically dominated the industry.
Current Members of OPEC (12 members as of 2026)
OPEC currently has 12 member countries (after multiple departures):
- Algeria.
- Republic of the Congo.
- Equatorial Guinea.
- Gabon.
- Iran.
- Iraq.
- Kuwait.
- Libya.
- Nigeria.
- Saudi Arabia.
- United Arab Emirates (UAE).
- Venezuela.
Former Members Who Have Left
- Ecuador (joined 1973, left 1992, rejoined 2007, left 2020).
- Indonesia (joined 1962, left 2008, rejoined 2016, suspended 2016).
- Qatar (joined 1961, left 1 January 2019).
- Angola (joined 2007, left 1 January 2024).
What is OPEC+?
- OPEC+ is a wider grouping that includes OPEC plus 10 other major oil-producing nations.
- Created in 2016 to coordinate oil supply decisions in response to the 2014-16 oil price collapse.
- Key non-OPEC members of OPEC+ include:
- Russia (the most important non-OPEC member).
- Mexico.
- Kazakhstan.
- Oman.
- Azerbaijan.
- Bahrain.
- Brunei.
- Malaysia.
- Sudan.
- South Sudan.
- OPEC+ controls about 40 to 50 per cent of global oil production.
- It takes collective decisions on production quotas to manage global oil prices.
OPEC’s Share of Global Oil
- OPEC controls about 40 per cent of global crude oil production.
- OPEC holds about 80 per cent of the world’s proven oil reserves, with most in the Middle East.
- OPEC+ together controls about 40 to 50 per cent of global oil production.
OPEC’s Decision-Making Structure
- Conference: The supreme authority of OPEC; meets twice a year in Vienna (or virtually).
- Board of Governors: Manages OPEC, made up of one Governor per member country.
- Secretariat: Headquartered in Vienna, headed by the Secretary-General.
- Economic Commission Board: Studies oil market trends.
How OPEC Influences Oil Prices
- Production quotas: OPEC sets production limits for each member to manage global supply.
- Raising production: Cools off prices and earns market share.
- Cutting production: Tightens supply and pushes up prices.
- OPEC+ joint actions: Combine OPEC and non-OPEC efforts (Russia is critical).
- Communication: Even announcements can move oil prices, since markets price in expected actions.
Why is OPEC Important for India?
- India is the world’s third-largest crude oil consumer, third-largest oil importer, and fourth-largest LNG importer.
- India imports more than 85 per cent of its crude oil needs.
- A large share of India’s crude imports comes from OPEC and OPEC+ countries, especially Saudi Arabia, Iraq, UAE, Russia (Russia’s share rose sharply after 2022).
- OPEC’s price and supply decisions directly affect:
- India’s import bill.
- The rupee (through current account dynamics).
- Inflation and fiscal balance.
- Fertiliser subsidies (since urea is natural gas-based).
- Aviation, transport, and industrial costs.
- India has been diversifying its crude oil sources to reduce dependence on a single supplier or bloc.
Major Chokepoints for OPEC Oil
- Strait of Hormuz (between Iran and Oman): About 20 to 25 per cent of global oil trade.
- Bab-el-Mandeb (between Yemen and Djibouti): Critical for Red Sea-Mediterranean traffic.
- Suez Canal (Egypt): Linking Red Sea to Mediterranean.
- Strait of Malacca (between Indonesia and Malaysia): Key for Asia-bound crude.
