Many oil producing countries have been able to develop their economies through the implementation of the main resource. But a dynamic growth of indicators would not have been possible if the developing states had not united.
Oil producing groups
Before finding out what organizations exist that regulate the production of crude oil and the conditions for its sale, it is necessary to understand which states are included in them. So, the main exporters of oil are those countries where it is produced. At the same time, the states that are world leaders produce more than a billion barrels annually.
Specialists from all countries are divided into several groups:
- members of OPEC;
- USA and Canada;
- North Sea countries;
- other large states.
World leadership belongs to the first group.
History of OPEC
An international organization that brings together major oil exporters is often called a cartel. It was created by several countries to stabilize prices for the main raw material resource. This organization is called OPEC (Eng. OPEC - The Organization of the Petroleum Exporting Countries).
The main oil exporting countries, which belonged to developing countries, united in 1960. This historic event happened at the September conference in Baghdad. The initiative was supported by five countries: Saudi Arabia, Iraq, Iran, Kuwait and Venezuela. This happened after the 7 largest multinational oil companies, also called the “Seven Sisters,” unilaterally lowered their purchase prices for oil. Indeed, depending on its value, they were forced to pay rent for the right to develop deposits and taxes.
But the new independent states wanted to control oil production on their territory and monitor the exploitation of resources. And given the fact that in 1960 the supply of this raw material exceeded demand, one of the goals of creating OPEC was to prevent further price reductions.
Beginning of work
After the creation of the international organization, oil exporting countries began to join it. So, during the 1960s, the number of states that joined OPEC doubled. The organization was joined by Indonesia, Qatar, Libya, Algeria, the
United Arab Emirates. At the same time, a declaration was adopted enshrining the oil policy. It stated that countries have the right to constantly monitor their resources and ensure that they are used in the interests of their development.
The main oil exporters in the world in 1970 completely took control of the production of flammable liquids. It is from OPEC's activity that prices set for raw resources began to depend. During this period, other oil exporting countries joined the organization. The list has expanded to 13 members: it also includes Ecuador, Nigeria and Gabon.
Necessary reforms
The 1980s became a rather difficult period. Indeed, at the beginning of this decade, prices have risen unprecedentedly. But by 1986, they had fallen, a price of about $ 10 per barrel was set. This was a significant blow, all oil exporting countries suffered. OPEC managed to stabilize the cost of raw materials. At the same time, a dialogue was established with states that are not members of this organization. Oil production quotas were also set for OPEC members. The cartel agreed on a pricing mechanism.
Significance of OPEC
To understand the trends in the global oil market, it is important to know how OPEC's influence on the situation has changed. So, in the early 1970s, the participating countries controlled only 2% of the national production of this raw material. Already in 1973, the states achieved that 20% of oil production fell under their control, and by the 1980s, they had become subject to more than 86% of all resource development. With this in mind, the oil exporting countries that joined OPEC have become an independent determining force in the market. Transnational corporations had already lost their strength by that time, because states, if possible, nationalized the entire oil industry.
General trends
But not all oil exporting countries were part of a specialized international organization. For example, in the 1990s, the government of Gabon decided to withdraw from OPEC, in the same period Ecuador temporarily suspended its participation in the organization’s affairs (from 1992 to 2007). Russia, which occupies a leading position in terms of production of this resource, in 1998 became an observer in the cartel.
At present, OPEC members carry out a total of 40% of world oil production. Moreover, they own 80% of the proven reserves of this raw material. The organization can change the required level of oil production in the participating countries, increasing or decreasing it at its discretion. At the same time, most of the states involved in the development of deposits of this resource are working at full capacity.
Major exporters
Now 12 countries are members of OPEC. Some countries involved in the development of raw materials base work independently. For example, these are the largest oil exporters such as Russia and the United States. They are not affected by OPEC; the organization does not dictate to them the conditions for the extraction and sale of this raw material. But they are forced to come to terms with world trends set by the cartel member countries. At the moment, Russia and the United States occupy a leading position in the world market along with Saudi Arabia. In terms of the production of combustible liquids, each state accounts for more than 10%.
But this is not all the main oil exporting countries. The list of dozens of leaders also includes China, Canada, Iran, Iraq, Mexico, Kuwait, the UAE.
Now in more than 100 different countries there are oil deposits, they are developing deposits. But the volumes of extracted resources are, of course, incomparably small compared to those owned by the largest oil exporting countries.
Other organizations
OPEC is the most significant association of oil producing states, but not the only one. So, for example, in 1970, the International Energy Agency was organized. Its members immediately became 26 countries. The IEA does not regulate the activities of exporters, but of the main importers of raw materials. The task of this agency is to develop the mechanisms of interaction that are necessary in crisis situations. So, it was his strategies that made it possible to somewhat reduce the influence of OPEC on the market. The main recommendations of the IEA were that countries create oil reserves, develop optimal routes for the movement of raw materials in the event of an embargo, and carry out other necessary organizational measures. This has contributed to the fact that not only the largest oil exporters can now dictate market conditions.