OPEC members Essay

OPEC members Essay

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OPEC is an oil producer’s association founded in 1960 by Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia and Venezuela and curently consisting of 14 members, including the organisators and Qatar, Libya, the UAE, Algeria, Nigeria, Ecuador and Angola(OPEC Statute, 2012). According to the OPEC Statute, the main objective of the organisation is «the coordination and unification of the petroleum policies of Member Countries and the determination of the best means for safeguarding their interests, individually and collectively»(p1, 2012). The organisation is frequently classified as a cartel(Bobrow&Kudrle, 1976; ) and therefore, its main aim can be simplified to the maintenance of the market price for oil at the level which would suit its members(Willet, 1979). The degree of the OPEC’s power in the oil market varied over time; it was regarded as the only significant player on the world oil market(Bobrow&Kudrle, 1976; Rewarding, 2004) and as an organisation «dissolving away»(Chopra, 1982) but even now - after 54 years from the creation date - collective production of all the members accounts to 45% of the global market share(Rose, 2004) and OPEC members hold 81% of the proven global oil reserves(OPEC webpage). The aim of this essay is to analyse the extent to which OPEC can be called an effective organisation. This will be done through the analysis of the OPEC’s ability to resist the main problems faced. In the first part of the essay OPEC will be analysed as a cartel with issues of price determination and possible cheating discussed. Also, the role of wealthy members in solving the problem of collective action will be overviewed. The second part of the essay will consider the threats that are posed by the conflicts inside the organ...

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Thomas D. Willet, «Conflict and Cooperation in OPEC: Some additional Economic Considerations», International Organisation 33, 4 (1979): 581-587

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OPEC Statute, Organization of the Petroleum Exporting Countries, 2012

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