OPEC meeting

Find out about the Organisation of the Petroleum Exporting Countries (OPEC) meeting and announcement – including why it’s important for traders and its effect on global oil prices.

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Contact us: +65 6390 5133

OPEC meeting

Find out about the Organisation of the Petroleum Exporting Countries (OPEC) meeting and announcement – including why it’s important for traders and its effect on global oil prices.

Call +65 63905133 or email accountopening@ig.com.sg to talk about opening a trading account. We’re here 24 hours a day, from Monday to Friday.

Contact us: +65 6390 5133

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How does the OPEC meeting affect traders?

The OPEC meeting affects traders because oil production quotas for OPEC member states and certain non-voting observers are set during the session. These quotas can have a strong impact on the global supply of oil and influence its price. This is because OPEC members controlled 79.4% of proven crude oil reserves in 2019, and the organisation supplied approximately 44% of the world’s oil.1

The quotas set at OPEC meetings can also affect demand in other energy markets, including natural gas and heating oil. This makes OPEC meetings important dates in some traders’ calendars.

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How does OPEC change the oil price?

OPEC aims to control the price of oil by adjusting supply volumes. If its members want to increase the price of oil, they can revise their production quotas downwards to limit supply. Alternatively, if they want to reduce the price of oil, they can raise their production quotas to increase supply. Assuming demand remains constant, the price of oil will move in the intended direction.

Despite OPEC’s best efforts to control the price of oil, there can be occasional short-term price spikes because of global crises.

These include events such as the September 2019 Abqaiq-Khurais attack which struck a Saudi Arabian oil processing facility. The fallout cut Saudi oil production by around half until early October 2019 and caused global oil prices to climb.

Traders may therefore wish to consider other economic data and news sources, in addition to the latest OPEC quotas, before speculating on oil prices.

Find out more about what affects oil prices

OPEC’s stated aims are to ‘coordinate and unify the petroleum policies of its member countries and ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.’

While OPEC’s mission statement might sound noble, it is really a cartel. It acts to fix prices, maximise profits and limit competition between its members. It has often been accused of anti-competitive actions including profiteering by constricting supply, and deliberately creating oil surpluses in an attempt to drive down prices and bankrupt competitors (like US shale producers).

Politics is also sometimes involved. For example, in 1973, its members voted to restrict supply to target countries it felt were supporting Israel in the Yom Kippur War. Global prices went from $3 a barrel in October 1973 to $12 a barrel by March 1974.

However, OPEC meetings can end in stalemate if members are not able to unanimously agree on new production volumes. Reaching a consensus is not easy as member countries will generally seek to maximise their own production levels while limiting production levels in other countries.

This problem is sometimes exacerbated by unrelated political tensions between nations. Friction between members can also arise if any country has exceeded the previously agreed quotas, as this can reduce the prices received by the group as a whole.

OPEC meeting format

Ordinary meetings are held twice a year, at the organisation’s headquarters in Vienna. Generally, these meetings are six months apart. Extraordinary meetings – which occur outside of the biannual schedule – can also be arranged for matters that cannot wait until the organisation is next meant to meet.

Decisions are announced via press conference on the day of each meeting, with most decisions becoming effective 30 days later (except where another date is agreed, or the decision is vetoed by a member before it is implemented).

OPEC also publishes monthly and annual oil market reports, as well as an annual world oil outlook report which assesses the long-term prospects for oil.

OPEC calendar 2020

Event Date
180th OPEC meeting 20 November 2020

At the last OPEC meeting – which took place on 6 June 2020 – participating countries agreed to extend historic production cuts of 9.7 million barrels a day until 31 July.

The cuts of 9.7 million barrels a day – the biggest in OPEC’s history – were previously set to reduce to 7.7 million barrels a day on 1 July 2020. It remains to be seen if these cuts will be extended once again at the next meeting.

Which countries are members of OPEC?

When OPEC was formed in 1960, it had five founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Since then, the organisation has grown to include 13 member countries (as of June 2020).

Each country is expected to send one or more delegates to each conference meeting, but there must be at least two-thirds in attendance for the meeting to obtain quorum. If a country’s delegation consists of more than one person, they must appoint a head of the delegation. This is usually the country’s oil or energy minister.

Each country has a single vote, and countries must vote unanimously before any change to policy can be implemented. Other countries may attend meetings as observers, but they do not get a vote.

Other major producers – such as Russia, Mexico and Kazakhstan – also sometimes attend OPEC meetings as non-voting observers to coordinate production levels. These countries – particularly Russia – can have a bearing effect on the outcome of OPEC meetings.

Country Date joined
Saudi Arabia 1960
Iran 1960
Iraq 1960
Venezuela 1960
Kuwait 1960
Libya 1962
United Arab Emirates 1967
Algeria 1969
Nigeria 1971
Ecuador 1973
Gabon 1975
Angola 2007
Equatorial Guinea 2017
Republic of the Congo 2018

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What is the OPEC meeting?

The OPEC meeting is a twice-yearly session in which the organisation sets oil production quotas for each of its 13 member countries. These quotas are important because they affect the global supply of oil and, in turn, its price.

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1 OPEC, 2019

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