OPEC and Global Oil Market Dynamics

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Context

Iraq, which is the second-largest crude producer in OPEC, recently threatened to leave the oil cartel.
This threat will happen unless OPEC significantly increases its oil production quota to support domestic economic growth and rebuilding efforts.

OPEC functions as a permanent intergovernmental organization formed by major oil-exporting nations.
The primary goal of the group is to coordinate petroleum policies in order to stabilize global oil markets and crude prices.

The group was founded during the Baghdad Conference (1960) on 14 September 1960.
The original founding members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
The headquarters of the organization moved from Geneva, Switzerland, to Vienna, Austria, in 1965.
Member states adopted a historic declaration in 1968 to assert their permanent sovereignty over natural resources.
The organization established the OPEC Fund for International Development (OFID) in 1976 to help developing countries.
OPEC partnered with major non-OPEC producers like Russia under the Declaration of Cooperation (DoC) in 2016 to form OPEC+.

Qatar left the organization in 2019 to focus entirely on liquefied natural gas production.
Ecuador withdrew its membership in 2020 so it could freely increase its oil production.
Angola exited the group in 2024 due to disagreements over production quotas.
The United Arab Emirates left in 2026 to pursue an independent national oil production strategy.

The organization coordinates petroleum policies to guarantee stable oil markets and fair prices for everyone.
It ensures a steady and reliable supply of petroleum to consumer nations across the globe.
It protects fair financial returns for investors who put money into the oil sector.

The organization monitors global oil demand and assigns mandatory production caps to prevent oversupply or shortages.
It introduces and manages an official reference basket for crude pricing to reduce global price volatility.
It coordinates large-scale production cuts during global economic slumps to clear oil gluts and protect capital.
It tracks international environmental talks, joins UNFCCC climate conferences, and plans long-term energy strategies.

OPEC heavily influences global oil prices, which directly impacts inflation, energy security, and economic stability worldwide.
The rapid growth of non-OPEC oil production, particularly U.S. shale oil, has reduced the overall market influence of the cartel.