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OPEC | What it is, Who formed it, and the Purpose of its Formation

An organisation that leads the development and growth of countries with oil reserves in securing the best price for their oil in the global market, and getting the best price for their oil throughout the world.

This organisation has been forward with the helpful initiatives that led to this outstanding growth of those countries, and betterment in the sector of fuel economy.

So in this article of ours, we are going to know about some key factors like What is OPEC? Who Formed OPEC and When? What was the purpose of its formation?

What is OPEC?

OPEC is stand for Organisation for the Petroleum Exporting Countries, which determines the production, supplies, and prices of fuel in the global market.

The community of this organisation is equipped with members who produce most of the fuel in the world. A survey also resulted as the members of this group produce 40% of the petroleum in the world. It make 60% of trade in the global market with that.

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OPEC Ministerial Meetings

The country of Saudi Arabia controls 3/4 of the total production of petrol of OPEC and plays a leading role in the organisation. While other important members are Iran, Iraq, and Kuwait, whose combined resources are even less than that of Saudi Arabia.

The organisation initiated itself with five countries in 1960, which include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. After the formation, other countries like Qatar and Indonesia merged with it. But they later suspended their involvement in the organisation.

Brief History of OPEC

The organisation was established in Baghdad in September 1960 as a collaboration of five major oil-producing countries in the world. Before this formation of Organisation for the Petroleum Exporting Countries, the market of oil was dominate by the “Seven Sisters”.

OPEC adapted to a “Declaratory Statement of Petroleum Policy in Member Countries”,  which helped them exercise their natural resources as per their expectations in the global market.

History of OPEC

By the end of 1975, OPEC resulted with a growth in the number of its members. The steps taken by the organisation were showing results in the volatility of the global market.

Over the next few decades, OPEC grew to include other major oil-producing nations, such as Qatar, Indonesia, and the United Arab Emirates. The organisation has been both praise and criticised for its role in setting the global price of oil through production cuts and quotas.

OPEC has faced numerous challenges over the years, including changes in global demand, competition from non-OPEC oil producers, and geopolitical conflicts. Despite these difficulties, OPEC remains a major player in the global oil market. It continues to .shape the industry through its decisions and actions.

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What was the purpose of OPEC’s formation?

The Organization of the Petroleum Exporting Countries (OPEC) was formed with the purpose of unifying and coordinating the petroleum policies of its member countries in order to secure fair and stable prices for petroleum producers. The main objective of r Organisation for the Petroleum Exporting Countries was to regulate the supply of oil in the global market. To ensure that its member countries received fair prices for their oil.

The formation of OPEC was a response to the economic and political challenges faced by oil-producing countries in the aftermath of World War II.

Purpose of OPEC's formatiom

At that time, the major oil companies dominated the industry, setting the price of oil and controlling the supply. The oil-producing countries felt that their resources were exploit and that they were not receiving a fair return for their oil. In response, OPEC was established to give these countries a collective voice in determining the price and supply of oil.

OPEC’s Impact on the Global Market

Organisation for the Petroleum Exporting Countries has a major impact on the global oil market. It has the ability to regulate the supply of oil and set prices. Apparently, it’s the one who controls the market.

The organisation sets production quotas for each member country. It helps to stabilise the supply of oil in the global market. When OPEC reduces the supply of oil, it tends to increase the price of oil. When it increases the supply of oil, it tends to lower the price of oil.

OPEC's impact on the global market

OPEC’s impact on the global oil market can seen through its influence on non-OPEC oil producers. When OPEC reduces the supply of oil, non-OPEC oil producers are often forced to reduce their own production. They cannot compete with the higher prices set by OPEC. As a result, Organisation for the Petroleum Exporting Countries has a significant impact on the overall supply and demand of oil in the global market.


While OPEC is one of the most successful organisations to control the energy availability in the global market. The organisation still finds difficulties in the production, supply, and even in ensuring a reliable price to these fuels.

At the end, OPEC will continue to face challenges, but its impact on the global oil market and its importance to the petroleum industry will likely remain significant for years to come.

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Frequently Asked Questions

How does OPEC control the price of fuels in the global market?

OPEC controls the price of the fuels by controlling the supply of it. If the organisation reduces the price, then the price will likely go up. If the organisation decides to increase the supply, then the prices will go downward.

How often OPEC meetings are held, and what are the decisions they make?

The meeting is held twice a year, and the subjects which get discuss in the meeting are the prices of the fuel at global level, and the production stats of it.

Has OPEC been successful in controlling the price of oil?

Yes, the organisation has become the wolf of the fuel market by manipulating the price and making it according to their comfort. OPEC has maintained stability in the oil market and ensured a fair and stable price for petroleum producers and a regular supply for consumers.

Who are the member countries of OPEC?

The current member countries of OPEC are Algeria, Iraq, Iran, Kuwait, Saudi Arabia, Venezuela, Indonesia, Libya, Nigeria, Qatar, United Arab Emirates, Ecuador, Angola, and Gabon.

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