According to recent reports from the International Energy Agency (IEA), a major shift could be on the horizon for global oil production. The Organisation of the Petroleum Exporting Countries (OPEC+), comprised of both OPEC members and additional oil-exporting nations, could potentially face a significant decrease in demand. This speculation arises from an observed surge in crude oil output from non-OPEC countries such as the USA, Norway, and Guyana.
What is OPEC+
The term OPEC+ refers to a group of oil-exporting countries, which extends beyond the original Organization of the Petroleum Exporting Countries to incorporate several other nations. These include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan. These countries are significant exporters of crude oil, despite not being part of the initial OPEC formation.
OPEC: A Closer Look
OPEC is a permanent intergovernmental organization, founded during the Baghdad Conference in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its primary function is to regulate oil supply with the aim of stabilizing global oil prices. The objective is to prevent economic instability for both oil-producing and purchasing countries. While its headquarters is located in Vienna, Austria, OPEC membership extends internationally to any country that significantly exports oil and aligns with the organization’s ideals.
As an example of the fluctuating nature of OPEC membership, Gabon withdrew its membership in January 1995, only to rejoin over two decades later, in July 2016. Currently, OPEC has a total of 14 Member Countries, ranging geographically from the United Arab Emirates to Ecuador.
International Energy Agency (IEA)
The IEA is an autonomous organization dedicated to ensuring reliable, affordable, and clean energy. Established in response to the oil crisis of 1973, its formation followed a steep increase in oil prices that shocked the global market. Headquartered in Paris, France, the IEA focuses on four main areas, also referred to as the 4Es; Energy security, Economic development, Environmental awareness, and worldwide Engagement. Their membership has expanded to include countries outside of Europe, with India becoming an associate member in 2017, and Mexico joining as the first Latin American member in 2018.
Critical Facts
| Fact | Details |
|---|---|
| OPEC Established in | 1960 |
| OPEC Headquarters | Vienna, Austria |
| Members of OPEC | 14 Countries |
| IEA Established in | 1974 |
| IEA Headquarters | Paris, France |
| Members of IEA | 30 Countries |
The Future of Oil Production
As illustrated by the latest analysis from the IEA, the landscape of global oil production is not static. Non-OPEC countries are increasing their production levels, with countries like the USA, Norway and Guyana leading the way. This uptick could significantly impact the demand balance, especially for OPEC+ nations, and affect the future dynamics of the global oil market. Given the importance of oil in the global economy, these changes could have far-reaching consequences.
