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OPEC meeting

Find out about the Organization 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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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 14 member countries. These quotas are important because they affect the global supply of oil and, in turn, its price.

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When is the next OPEC announcement?

The next OPEC meeting will be held on 22 June 2018 at the organisation’s headquarters in Vienna, Austria. The outcome will be announced in a press conference at 5pm (UK time) on the day of the meeting.

How does the OPEC meeting affect traders?

OPEC’s members are estimated to control more than two thirds of proven crude oil reserves, and currently supply approximately 44% of the world’s oil.  So, the production quotas set at OPEC meetings can have a strong impact on the global supply of oil and influence its price. The quotas set can also affect demand in other energy markets, including natural gas and heating oil.

This makes OPEC meetings important dates in some traders’ calendars. 

Markets Bid Offer Change
Oil - US Crude
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Oil - Brent Crude
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Natural Gas
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Heating Oil
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No Lead Gasoline
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London Gas Oil
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Prices above are subject to our website terms and conditions. Prices and indicative only. 

How does OPEC change the oil price?

OPEC aims to change 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 revise their production quotas upwards to increase supply. Assuming demand remains constant, the price of oil will move in the intended direction. 

Other major producers also sometimes attend OPEC meetings as non-voting observers to coordinate production levels. For example, in January 2017, several non-members agreed to collude with OPEC to reduce oil production until March 2018.

However, OPEC’s ability to regulate oil prices has subsided this decade due to shifts in global supply and demand. The US has increased domestic shale oil production in recent years, reducing demand for OPEC produced oil. This has put downward pressure on global prices, even as Chinese consumption has rocketed. However, there have still been occasional short-term price spikes as a result of global crises (eg the Arab Spring in 2011), as uncertainty surrounding future supply drives surges in demand.

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 on what affects oil prices

Why do OPEC countries agree to oil quotas?

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 new production volumes. Reaching a consensus is not easy as member countries will generally seek to maximise their own production levels, and limit others countries’, in order to benefit from the best possible prices and volumes. 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 dates and format

The OPEC conference meets twice each year at the organisation’s headquarters – known as the Secretariat building – for ordinary meetings. Extraordinary meetings can also be scheduled, but only if requested by a member country and approved by a majority of OPEC members.

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 2018

Event Date Announcement
174th (ordinary) OPEC meeting 22 June 2018 Press conference, 5pm (UK time)

 

What happened in the last OPEC meeting?

At November’s meeting, OPEC agreed its output cuts would be extended to the end of 2018. The cuts will continue to be shared with several non-members including Russia, with the aim of maintaining a united front against US shale oil output (which is reducing demand for imported oil in the US).

It will be fascinating to watch the oil price in the build up to the next meeting on 22 June 2018, to see whether this extension to output cuts will be enough to stave off another decline.

Which countries are members of OPEC?

When OPEC was founded in 1960, it comprised five founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. It now includes 14 member countries.

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 if permitted by the conference, but do not get a vote.

Country Years of membership
Algeria 1969 – present
Angola 2007 – present
Ecuador 1973 – 1992, 2007 – present
Equatorial Guinea 2017 – present
Gabon 1975 – 1995, 2016 – present
Iran 1960 – present
Iraq 1960 – present
Kuwait 1960 – present
Libya 1962 – present
Nigeria 1971 – present
Qatar 1961 – present
Saudi Arabia 1960 – present
United Arab Emirates 1967 – present
Venezuela 1960 – present

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