Question

What is OPEC and how would it be described in economic terms? 200 words

Answer 1

The membership objective of OPEC is to "coordinate and unify the petroleum policies of its member countries and ensure the stability of the oil markets in order to ensure an secure, economic and regular supply of petroleum to customers, a steady income for producers and a reasonable return on capital for those investing in the petroleum industry."
OPEC members together manage about 79.4 per cent of the estimated proven crude reserves in the world.
OPEC member states control the market and jointly agree to increase or decrease oil production to ensure stable prices and supply.

Organization of the Petroleum Exporting Countries (OPEC) is a community consisting of 14 of the world's largest oil-exporting nations. The OPEC was established in 1960 to coordinate its members' petroleum policies and provide technical and economic assistance to the member states. OPEC is a cartel that seeks to control the oil supply in an attempt to determine the world market price of oil, in order to prevent instability that could impact the economies of both producing and consuming countries. OPEC countries include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela (the five founders), plus the United Arab Emirates, Libya, Algeria, and Nigeria, as well as five other nations.

The emergence of new technology, especially fracking in the United States, has had a significant impact on world oil prices and has reduced the role of OPEC in the markets. As a result, oil production has risen globally, and prices have fallen dramatically, putting OPEC in a vulnerable position. In an effort to drive higher-cost producers out of the market and reclaim market share, OPEC agreed to sustain high production rates, and consequently low prices, as late as June 2016.