OPEC

RECENT NEWS
The Times of India  Jul 13  Comment 
The global oil market should be more balanced next year as China and the developing world increase oil consumption while supply of shale oil from North America and other regions grows more slowly, Opec said on Monday.
Financial Times  Jun 12  Comment 
It is still too early to tell how many key factors will play out, says Anjli Raval
OilVoice  Jun 8  Comment 
The price of Brent crude oil fell Friday as the Organisation of Petroleum Exporting Countries Opec has committed to maintaining production at current levels with commentators citing concerns around
The Times of India  Jun 8  Comment 
Oil prices fell in Asia today after Opec decided to maintain its high output levels, while traders were also weighing the possible return of Iranian supplies that have been curtailed by international sanctions against Tehran, analysts said.
guardian.co.uk  Jun 5  Comment 
Saudi oil minister Ali al-Naimi, who wants to target US shale producers, claims latest Opec meeting was ‘amicable’ despite some exporters seeking higher prices Saudi Arabia has bulldozed fellow members of the Opec oil cartel to hold...
Financial Times  Jun 5  Comment 
By reaffirming output cap cartel effectively signals its members can produce whatever oil they want,
Financial Times  Jun 5  Comment 
Main talking points include cartel’s output target and an eventual increase in Iranian exports
The Times of India  Jun 4  Comment 
India on Thursday stepped up its engagement with oil cartel Opec by establishing a ministerial level dialogue even as oil minister Dharmendra Pradhan courted his counterparts from member nations like Iran, Iraq and Qatar to deepen energy engagements.
guardian.co.uk  Jun 4  Comment 
By cutting back to 30m barrels a day this past November, Opec was said to have launched a price war for global market share. But the US oil boom still presents a heretofore unknown foe: another player capable of ramping up production The last...
Financial Times  Jun 4  Comment 
Jakarta believes it could “bridge the gap” between oil exporters and importers




RELATED WIKI ARTICLES

Related Articles

 
TOP CONTRIBUTORS

OPEC stands for the Organization of the Petroleum Exporting Countries, an international cartel consisting of Iraq, Indonesia, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Prospective members include Bolivia, Canada, Sudan and Syria who have been inivted by OPEC to join. The recent discovery of a sizeable oil field in the South Atlantic supports Brazil's possible application. The organization is based in Vienna and controls over 40% of the world's total oil production, and its member nations account for over 60% of the world's estimated oil reserves. Although OPEC is slowly beginning to lose control over crude oil prices, its holdings still give it a large amount of weight in price determination.

Brief Economics of OPEC

Why was OPEC formed in the first place? What gave OPEC the power to hit the news with their every decision, and what do they have to gain?

Unlike competitive industries such as garment production, oil production belongs to what is known as an Oligopoly, in which only a few producers produce most of the output. Businesses or Nations in an oligopoly produce almost the same thing and sell it at a price determined by demand and the overall supply of all the producers. However, in order to maximize profit return on every unit of output (hence economic profit), businesses in an oligopoly need to collude and reduce output together so that prices rise and overall revenue rises. How does overall revenue rise when demand should naturally drop on higher prices? Well, the problem is that the demand for oil all over the world is fairly inelastic, which means that the drop in demand is lower than the rise in price! They would rather sell one unit at $100 then 2 units at $45 each.

So, that is what OPEC does and why it exists. OPEC nations are in an oligopolistic industry trying to maximize profits through production collusion. In a free market, collusion is naturally illegal (hence a cartel) but who is to control NATIONS forming a cartel?

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki