What makes opec so powerful

All three returned at a later stage, but Indonesia, which rejoined and withdrew a second time in , has not returned to the bloc since. Over the decades, OPEC has regularly been criticised for its role in fixing the global oil market. According to the organisation, it is better for the oil supply and price to be in the hand of an organisation like OPEC than in the hands of private companies.

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List of Partners vendors. The cartel's goal is to exert control over the price of the precious fossil fuel known as crude oil. However, no individual country actually wants to reduce supply, as this would mean reduced revenues. Ideally, they want the price of oil to rise while they increase supply so that revenues also rise.

But that is not market dynamics. Over time, the price reverts back to a level, usually lower, when supply is not meaningfully cut or demand adjusts. For instance, on June 22, , the cartel met in Vienna and announced that they would be increasing supply.

Saudi Arabia and Russia, two of the largest oil exporters in the world who both have the ability to increase production, are big proponents of increasing supply as that would increase their revenues. However, other nations, who cannot ramp up production, either because they are operating at full capacity or are otherwise not allowed to, would be opposed to this. Saudi Arabia retaliated by ramping up production sharply.

This sudden increase in supply happened at a time when global oil demand was slumping as the world was dealing with the global crisis. In the spring of , oil prices collapsed amid the economic slowdown. The collaborating countries engage in meetings if they want to change the price, if for example there is a rise in demand. Although the oil price was expected to stay low because of the slowdown in global demand, OPEC has currently agreed to cut its production.

In order to stabilize the market, the oil cartel now has agreed to decrease the total output by 1. This means the output will be lowered to Due to an unexpected agreement between Iraq, Iran and Saudi Arabia this important decision was made, impairing Saudi Arabia the most, with a lowered output of