OPEC+ or “OPEC Plus” is an informal alliance of 23 oil-producing countries.
It was formed in 2016 when OPEC, the Organization of the Petroleum Exporting Countries, agreed to cooperate with 10 other oil producers, including Russia.
The goal of OPEC+ is to coordinate oil production and stabilize oil prices.
OPEC+ is a powerful force in the global oil market. Its decisions can have a significant impact on oil prices and the global economy.
What is OPEC+?
OPEC+, an alliance of 22 oil-producing nations, was formed to address the challenges in the global oil market, such as oversupply and price volatility.
Comprising the 12 members of the Organization of the Petroleum Exporting Countries (OPEC) and 10 additional oil-producing countries, this influential group holds regular meetings to discuss and agree on production adjustments to stabilize oil prices and maintain a balanced market.
Why was OPEC+ formed?
The OPEC+ alliance was established in 2016 in response to a significant decline in oil prices due to oversupply in the global market.
As the traditional efforts by OPEC alone were insufficient to address the problem, OPEC member nations decided to seek support from non-OPEC countries to implement coordinated production cuts.
By fostering cooperation between OPEC and non-OPEC countries, the group aims to create a more predictable and balanced oil market, benefiting both producers and consumers.
Who is part of OPEC+?
The 13 12 OPEC members include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the United Arab Emirates, and Venezuela.
The 10 additional oil-producing countries that form the “+” in OPEC+ are Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
Why is OPEC+ important?
Since its inception, OPEC+ has played a significant role in stabilizing the global oil market.
The primary goal of OPEC+ is to stabilize global oil prices by balancing supply and demand in the oil market.
To achieve this goal, the group coordinates production cuts among its member countries, ensuring that the market doesn’t experience an oversupply or shortage of oil.
The group’s coordinated production cuts have helped reduce the oversupply of oil, leading to a gradual recovery in oil prices.
In 2016, when oil prices were at a low point, OPEC+ agreed to cut production. This helped to boost oil prices and to stabilize the market.
In 2020, when the COVID-19 pandemic caused a sharp decline in demand for oil, OPEC+ agreed to cut production even further. This helped to prevent a collapse in oil prices and to keep the market afloat.
The regular meetings and communication between OPEC+ members have also contributed to increased transparency and predictability in the oil market.
However, the effectiveness of OPEC+ can be influenced by various factors, such as geopolitical tensions, economic fluctuations, and changing demand patterns.
The alliance has faced challenges in maintaining production discipline among its members, and external factors, like the COVID-19 pandemic, have added further complexity to the group’s efforts to balance the oil market.