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Oil: what is the role of OPEC? Answer in five graphs

2020-09-14T18:23:12.994Z


INFOGRAPHIC - OPEC has long been raining and shining on oil prices. Today, 60 years after its creation, the organization of oil-producing countries is less influential but still counts.


An oil cartel

The intergovernmental organization of oil-exporting countries (OPEC) was created during the Baghdad conference in September 1960. It brings together 5 countries and sets itself the objective of influencing the regulation of the oil market until then managed by the oil companies.

The cartel sets its own production levels according to its reserves and demand and thus pushes up prices.

Today, OPEC brings together 15 countries including Qatar.

The latter, the first non-founding country to join the organization, has just announced its departure.

A question of black gold

To this day, the weight that oil represents in the global economy remains considerable.

It has long been the primary source of primary energy used in the world.

Since the end of the twentieth century and the creation of OPEC, the evolution of the price of black gold alone tells the story of global economic and geopolitical events.

The current context is difficult, the Coronavirus crisis which is paralyzing the world economy has caused crude prices to plummet to less than 25 dollars in March 2020.

Economies dependent on oil revenues

A high oil price represents a financial windfall for producing countries.

Thus, OPEC's objective is to promote the conditions for an increase in prices.

Conversely, when the price of a barrel collapses, the effects are quickly felt.

Countries whose economy is based solely on this single resource, such as Venezuela or Algeria, encounter significant budgetary difficulties.

If OPEC's share in total production has fallen, the cartel is nonetheless the organization which concentrates two-thirds of world reserves.

United States: the new deal

Since 2014, the production of American shale oil has destabilized the market by inflating global supply.

This has the effect of an instantaneous drop in prices.

Today, the United States takes the top spot among oil producing countries.

They are now able to meet two-thirds of their domestic needs against a third 10 years ago, thus reducing their dependence on the Gulf countries.

Alliances to weigh

In 2016, OPEC counter-attacks by forging new alliances to stem the fall in prices.

It signs a historic agreement with ten other non-OPEC producing countries including Russia, the second largest oil producer in the world.

An alliance that has borne fruit.

A new agreement, still between OPEC and its allies, was signed in 2018 to once again limit the production of crude in the hope of improving prices.

Source: lefigaro

All news articles on 2020-09-14

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