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What is OPEC?
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| OPEC is an acronym for Organization
of the Petroleum Exporting Countries. OPEC was formed in 1960 in
Baghdad, Iraq with five founding member countries. Currently OPEC is a
cartel composed of 11 oil producing countries. Current member countries
include: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar,
Saudi Arabia, United Arab Emirates, and Venezuela. OPEC's stated purpose
is said to serve three main functions: 1) Help stabilize world oil
prices 2) Ensure oil producers achieve a reasonable rate of return on
production 3) Ensure a stable supply of crude oil for consumer use. OPEC
has a current goal of $27 US per barrel of oil. |
How much crude oil do the OPEC
countries produce?
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| Collectively these countries hold
approximately 77% of known world crude oil reserves. In terms of daily
crude oil production OPEC countries currently produce about 41% (24.2
million barrels per day) of the world's crude oil. The oil exported by
the OPEC countries accounts for 55% of all oil traded internationally.
OPEC countries also represent about 15% of total world natural gas
production. |
How does OPEC set oil prices?
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| OPEC does not "set" oil prices. OPEC
manipulates the free market price of crude oil by setting caps on the
oil production of its member countries. Twice each year, ministers from
each OPEC country meet in Vienna, Austria to review the status of the
international oil market and to forecast the future oil demands in order
to agree upon an appropriate crude oil production level. |
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