OPEC
- Its Objectives, Environment and Behaviour
James Miao
Nanjing University of Post and Telecommunications
Dec 2008
Abstract
This paper identifies the mission and key objectives of OPEC, and external factors of its market environment. Analysis is conducted with examples to illustrate how OPEC react to the changes in environment and significant social, political and natural events, in order to achieve its control of international market and economical gains to its best interest.
Key words: OPEC, market environment, external factors
Introduction
What is OPEC?
As per the definition in Wikipedia officite site, the “Organization of Petroleum Exporting Countries (OPEC) is a cartel of 12 countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela” [1]. The organization has maintained its headquarters in Vienna since 1965,[2] and hosts regular meetings among the oil ministers of its Member Countries. Indonesia's membership from OPEC was voluntarily suspended recently as it became a net importer of oil. [3]
OPEC’s Mission
As per OPEC official website, its mission “is to coordinate and unify the petroleum policies of Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital to those investing in the petroleum industry.” [4]
OPEC’s values and key objectives
According to its statutes, one of the principal objective is “the determination of the best means for safeguarding their interests, individually and collectively”. It also should “devise ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations”; and give “due regard at all times to the interests of the producing nations and to the necessity of securing a steady income...