LEARN MORE...

Degree of Influence of OPEC on Oil Prices Paper

Content type

User Generated

Subject

Business

Type

Research Paper

Uploaded By

NyunaqebX

Pages

Showing Page:

1/8

Running head: DEGREE OF INFLUENCE OF OPEC ON OIL PRICES 1

The Degree of Influence of OPEC on Oil Prices

Student’s Name

Institutional Affiliation

Showing Page:

2/8

DEGREE OF INFLUENCE OF OPEC ON OIL PRICES 2

The Degree of Influence of OPEC on Oil Prices

The Organization of Petroleum Exporting Countries (OPEC) is an intergovernmental

organization that was formed by 14 oil-producing countries. The organization was formed to

coordinate and unify petroleum policies among its members in ensuring stable prices of oil in the

market. To ensure oil prices remain stable, OPEC has continuously relied on economic concepts

of regular demand and supply of petroleum to consumers, the level of income of produces, and

the economic capacity of country members. The organization has been regulating oil prices to

ensure members get a fair return on capital they have invested in the petroleum industry. OPEC

members meet twice in a year to agree on oil prices and the quantity of oil that each member

should produce (Owyang, 2017). If a nation fails abide by the set rules, no sanctions or penalties

are imposed. Each nation is expected to act responsibly by adhering to the agreed standards of

reporting its own production. However, a country is mostly likely refuse to exploit others in

terms of their contribution because none of the members want to be kicked out of OPEC

(Owyang, 2017). Despite have such strict policies, OPEC has recently completely lost control of

the price of oil. Some countries have added taxes on gasoline and other petroleum-based

products to conserve their reservoirs. The essay will show that the cause of OPEC losing its lost

power is future markets and commodity traders that are changing forces of the oil market.

Some of the recent decisions that OPEC has implemented in 2018 includes the reduction

of 1.2 million barrels of oil that each member contributes to OPEC. Members were supposed to

reduce their production contribution by 800,000 bpd while allies were to reduce by 400, 000 bpd.

The aim of this goal was to ensure the price of oil would return to $70 per barrel (Paraskova,

2019). In November 2019, the changes in oil policies by OPEC caused the average price of oil

barrel to drop to $65. This caused a ripple effect on the supply of oil in the world markets as

Showing Page:

3/8

End of Preview - Want to read all 8 pages?

Access Now

Unformatted Attachment Preview

Running head: DEGREE OF INFLUENCE OF OPEC ON OIL PRICES The Degree of Influence of OPEC on Oil Prices Student’s Name Institutional Affiliation 1 DEGREE OF INFLUENCE OF OPEC ON OIL PRICES 2 The Degree of Influence of OPEC on Oil Prices The Organization of Petroleum Exporting Countries (OPEC) is an intergovernmental organization that was formed by 14 oil-producing countries. The organization was formed to coordinate and unify petroleum policies among its members in ensuring stable prices of oil in the market. To ensure oil prices remain stable, OPEC has continuously relied on economic concepts of regular demand and supply of petroleum to consumers, the level of income of produces, and the economic capacity of country members. The organization has been regulating oil prices to ensure members get a fair return on capital they have invested in the petroleum industry. OPEC members meet twice in a year to agree on oil prices and the quantity of oil that each member should produce (Owyang, 2017). If a nation fails abide by the set rules, no sanctions or penalties are imposed. Each nation is expected to act responsibly by adhering to the agreed standards of reporting its own production. However, a country is mostly likely refuse to exploit others in terms of their contribution because none of the members want to be kicked out of OPEC (Owyang, 2017). Despite have such strict policies, OPEC has recently completely lost control of the price of oil. Some countries have added taxes ...
Purchase document to see full attachment

Tags: OPEC oil prices OilProduction saudi arabia global oil prices