Opec - Significance In The International Oil Market
Like any other commodity the price of crude oil also is borne to fluctuations during times of oil shortage or oversupply of oil
. OPEC ensures stabilization of petroleum prices during such times. The oil prices are highly influenced by OPEC and this International oil cartel thrives to control the oil prices. The current daily basket price stands at $70.48 per barrel. Some of the major goals that OPEC concentrates on are to ensure that the consumers are supplied with Petroleum on time and to ensure that the oil producing nations earn revenue on a regular basis. Even though the production quota is set for the 12 member countries there is no quota set for Iraq.
OPEC also coordinates the oil production policies of the world's richest countries in terms of oil production. These cartel members hold most of the proven oil reserves. Even though production quota is set for the member nations of the organization of the Petroleum Exporting Countries or OPEC, the individual member country takes the ultimate decision. All member nations of OPEC have a national oil company (NOC), which is controlled by government. Most of the member countries also have investor owned or International oil companies running. This way the member countries receive a steady income as well as supply of crude oil is regular to the crude oil consuming countries.
The percentage of proven oil reserves held by the OPEC member nations is increasing as the oil reserves, which were not reachable before are being easily accessed with the implementation of latest technology. The proven oil reserves in the member nations account for more than 1000 billion barrels of oil. 72 % of the oil reserves are concentrated on the Middle East. As demand for oil is increasing the price of oil may increase simultaneously. In 2008, the OPEC share of oil reserves stood at 79 % whereas the nonOPEC oil reserves accounted for 21 %. The OPEC member countries have established their importance in the International oil market. The price of crude oil varies in each consuming nation depending upon the various levels of government taxes. Change in price of crude oil is influenced by war and other factors.
Periodical meetings are conducted among the member nations to discuss the various objectives and to determine the production quota. The meetings can be scheduled to discuss the current issues faced by OPEC If each of the member nations agrees to the production quota set by OPEC then market stability can be ensured in the International oil market. The production quota set varies from each member nation. OPEC thrives to achieve its goals so that the global economy is stable as well as the consuming nations are supplied crude oil at a fair price. Even though disputes keep arising, OPEC has established its importance in the International oil market.