At COP28, WRI helped elevate cities (which produce over 70% of the world’s greenhouse gas emissions) on the climate agenda by supporting the launch of the Coalition for High Ambition Multi-level Partnerships (CHAMP). Amongst OPEC’s current members, Saudi Arabia holds the most sway due to its substantial oil reserves and production capacity; the country is the group’s de facto leader and often guides OPEC’s strategies and decisions. Iraq and Iran, founding members with considerable reserves, also play influential roles, although Iran’s impact has been moderated by international sanctions.
Petroleum & Other Liquids
Forms EIA uses to collect energy data including descriptions, links to survey instructions, and additional information. Reserves, production, prices, employment and productivity, distribution, stocks, imports and exports. Some of the world’s greatest oil-producing countries, such as Russia, China, and the U.S., do not belong to OPEC. Ecuador suspended its OPEC membership from 1992 until 2007 and then withdrew in 2020. Indonesia suspended its membership beginning in 2009 and briefly rejoined in 2016 before suspending its membership again that year. Qatar, during a prolonged blockade implemented by other OPEC countries, terminated its membership in January 2019 to focus on natural gas production.
This stance often involves highlighting the need for energy security and economic stability alongside environmental considerations. However, critics argue that this position significantly slows down the global shift towards renewable energy sources. The top investment advisors financial crisis had a significant impact on global demand for oil, leading to a sharp decline in prices. OPEC responded by agreeing to a substantial production cut to stabilise prices, showcasing its ability to adapt to changing global economic conditions.
How does OPEC influence global oil prices?
The organization is designed to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets.” This provides consumers with a consistent oil supply and petroleum producers with regular income. The influence of individual OPEC members on the organization and on the oil market usually depends on their levels of reserves and production. Saudi Arabia, which controls about one-third of OPEC’s total oil reserves, plays a leading role in the organization. Other important members are Iran, Iraq, Kuwait, and the United Arab Emirates, whose combined reserves are significantly greater than those of Saudi Arabia.
OPEC’s Pursuit of Clean Cooking for All: The Role of LPG
In recent years, there has been a gradual but noticeable shift in OPEC’s stance regarding environmental issues. Some member countries, notably Saudi Arabia and the UAE, have started to invest in renewable energy projects and research into carbon capture and storage technologies. These initiatives signal a growing recognition within OPEC of the need to engage with the global conversation on climate change and environmental sustainability. OPEC’s relationship with environmental issues and climate change is complex, reflecting the tension between the organisation’s primary role as a guardian of its members’ oil interests and the growing global urgency for environmental sustainability. As the world increasingly shifts its focus towards green energy and reducing carbon emissions, OPEC’s stance on these matters has been a subject of intense scrutiny and debate.
Kuwait, which has a very small population, has shown a willingness to cut production relative to the size of its reserves, whereas Iran and Iraq, both with large and growing populations, have generally produced at high levels relative to reserves. Revolutions and wars have impaired the ability of some OPEC members to maintain high levels of production. The eight participating countries reiterated that the 1.65 million barrels per day may be returned in part or in full subject to evolving market conditions and in a gradual manner.
OPEC Secretariat receives updated compensation plans from Russia, Iraq, the United Arab Emirates, Kazakhstan, and Oman
Beyond the negotiation rooms, WRI has helped raise climate ambition and secure commitments among a wide range of stakeholders. WRI research on food systems helped inform the 2021 UN Food Systems Summit and contributed to the 2023 Emirates Declaration on sustainable agriculture. Our engagement with COP presidencies and other leaders helped advance conversations around nature-based solutions, including through the COP26 Glasgow Leaders Declaration on Forests and Land Use.
And because the organization’s main goal is to stabilize oil production and prices, it is able to exert some influence over production from other nations. OPEC’s strategy relies on its ability to adjust these production quotas in response to global economic conditions. When the oil market experiences an oversupply, leading to a drop in prices, OPEC members can agree to reduce production quotas, thereby tightening supply and supporting higher prices. The 1973 oil embargo was a crucial moment that underscored OPEC’s growing influence.
COP29 is also a pivotal moment for countries to signal how they will strengthen their national climate plans next year, renew their commitment to fulfilling past COP pledges, and step up their actions on adaptation and responding to loss and damage. OPEC was established in September 1960 between 5 oil-producing countries namely; Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. These outcomes are registered in formal “COP decisions” at each summit, outlining measures that all Parties agree to carry forward. Outside of the formal negotiations, COPs have also become key moments for a broader set of actors, including businesses, NGOs, local governments and more, to announce major new climate initiatives and commitments. Comprehensive data summaries, comparisons, analysis, and projections integrated across all energy sources.
- Saudi Arabia, which has the second largest reserves and a relatively small (but fast-growing) population, has traditionally played a dominant role in determining overall production and prices.
- Why not request a free demo with one of our experts – no obligation or commitment required.
- If oil prices are falling due to excess supply (caused by weak demand or additional production from non-member nations), OPEC will reduce the quotas of its members to cut global oil supplies.
- OPEC’s actions at COP28 have attracted significant criticism, highlighting a growing divide between the organisation’s public commitment to environmental sustainability and its resistance to reducing reliance on fossil fuels.
- The group will reduce its collective supplies when demand is weak or if non-members are producing too much oil to stabilize prices.
- The financial crisis had a significant impact on global demand for oil, leading to a sharp decline in prices.
However, starting in January 2019, OPEC reduced output by 1.2 million barrels a day for six months due to a concern that an economic slowdown would create a supply glut, extending the agreement for an additional nine months in July 2019. Oil prices and OPEC’s role in the international petroleum market are subject to a number of different factors. The advent of new technology, especially fracking in the United States, has had a major effect on worldwide oil prices and has lessened OPEC’s influence on the markets. As a result, worldwide oil production increased and prices dropped significantly, leaving OPEC in a delicate position. The organization gained attention when Arab members cut production and banned exports to the U.S. and the Netherlands. The embargo was a response to the West’s support of Israel during the Yom Kippur War in October 1973.
- However, critics argue that this position significantly slows down the global shift towards renewable energy sources.
- The UAE, particularly through Abu Dhabi, is another key player, known for balancing alignment with Saudi policies and its independent stance.
- These countries, with their diverse economic and political backgrounds, are the main players within OPEC, shaping dynamics and working together to stabilise the global oil market while balancing their national interests.
- It hosted the first-ever “Local Climate Action Summit,” where more than 500 mayors, governors and other local leaders came together to elevate cities on the climate action agenda.
What is OPEC+ and how is it different from OPEC?
Over the past few years, OPEC+ meetings have focused on reducing oil production to help stabilize oil prices after the COVID-19 pandemic, which dramatically reduced demand and led to significantly lower oil prices. More recently, on April 2, 2023, OPEC+ members agreed to cut oil production by 1.2 million b/d until the end of 2023, which is in addition to production cuts already in place. This agreement means production targets will be 3.66 million b/d lower each month relative to actual August 2022 production through the end of 2023. Although these cuts are significant, we expect that growth in non-OPEC oil supply over the next two years will help balance markets and limit any significant increases in oil prices, according to our April Short-Term Energy Outlook. Producers had an overabundance in supply with no place to store it, as the world experienced lockdowns cutting down demand.
The organisation, led by its Secretary-General Haitham Al-Ghais, has been criticised for actively opposing global efforts to phase out fossil fuels. In a controversial move, Al-Ghais urged OPEC members to reject any agreement at the summit targeting fossil fuels, rather than emissions. This stance has been perceived as a direct challenge to the international community’s efforts to combat climate change and transition to renewable energy sources.
