OPEC

Question 1

What is OPEC?

Answer 1

•Organisation of Petroleum Exporting Countries, a permanent intergovernmental organisation of twelve oil-exporting developing nations.

Question 2

OPECs declared aims are:

Answer 2

• protect the interests of member countries
• stabilise oil prices
• ensure efficient, economic and regular supply of oil

Question 3

Why did OPEC form?

Answer 3

“Middle Eastern companies felt they were being exploited by foreign oil companies; felt uncomfortable with fluctuating oil prices so they formed a cartel and agreed a set price for oil; took over fields.”

Question 4

What role does OPEC play in energy supply?

Answer 4

• It sets oil production quotas for member countries in response to economic growth rates and demand-and-supply conditions.
• If demand rises, it can increase oil production to prevent steep price rises.
• If demand falls, oil can be reduced to stabilise the price.

Question 5

Why is OPEC such a powerful player?

Answer 5

• It has around 78% of the world’s oil reserves
• It produces around 45% of the world’s crude oil and 15% of natural gas
• It has the power to significantly affect oil prices by increasing or decreasing production