A cartel is a group of apparently independent producers whose goal is to increase their collective profits through price fixing, supply limitation, or other restrictive practices. Cartels generally control sales prices, but some are organized to control the prices of purchased inputs. Cartels generally occur in oligopolies, where there are a small number of sellers and generally involve homogeneous products. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”?Get the original essay The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 14 countries as of May 2017, founded in 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, Venezuela), and whose headquarters has been in Vienna since 1965. In 2016, the 14 countries accounted for about 44 percent of global oil production and 73 percent of global "proven" oil reserves, giving OPEC major influence over global oil prices that were previously determined by multinational oil companies dominated by the United States. The stated mission of OPEC is "to coordinate and unify the oil policies of its member countries and to ensure the stabilization of oil markets, in order to ensure an efficient, economical and regular supply of oil to consumers, an income stable for producers and a fair return. on capital for those investing in the oil industry. The organization is also a leading provider of international oil market information. The creation of OPEC marked a shift toward national sovereignty over natural resources, and OPEC's decisions came to play a leading role. on the global oil market and in international relations. The effect can be particularly strong when wars or civil unrest result in prolonged supply interruptions. In the 1970s, restrictions on oil production led to a dramatic rise in oil prices and OPEC's revenues and wealth. long-lasting and far-reaching consequences for the global economy. In the 1980s, OPEC began setting production targets for its member countries; and typically, when production targets are reduced, oil prices rise, most recently following decisions the organization made in 2008 and 2016 to reduce oversupply. Current member countries As of May 2017, OPEC had 14 member countries: six in the Middle East (West Asia), six in Africa, and two in South America. According to the United States Energy Information Administration, OPEC's combined rate of oil production (including gas condensate) accounted for 44 percent of the world's total in 2016 and OPEC accounted for 73 percent of world reserves. of “proven” oil, 48 percent of which comes from just the world’s six oil reserves. Members from the Middle East. Approval of a new member country requires the agreement of three-quarters of OPEC's existing members, including the five founders. In October 2015, Sudan officially submitted a membership application, but is not yet a member. Expired Members For countries that export oil in relatively small volumes, their limited bargaining power as OPEC members would not necessarily justify the burdens imposed by OPEC production quotas and membership costs. Ecuador withdrew from OPEC in December 1992, because it was unwilling to pay the $2 million annual feeAmericans and believed it needed to produce more oil than it was allowed under its OPEC quota at the time, although it had joined OPEC in October 2007. The concerns prompted Gabon and the Indonesia to suspend their membership and re-enter the country. Observers Since the 1980s, representatives of Egypt, Mexico, Norway, Oman, Russia and other oil-exporting countries have attended numerous OPEC meetings as observers . This arrangement serves as an informal policy coordination mechanism. Leadership and decision-making The OPEC Conference is the highest authority in the organization and is composed of delegations normally led by the oil ministers of member countries. The general director of the organization is the Secretary General of OPEC. The Conference usually meets at its headquarters in Vienna, at least twice a year and in additional extraordinary sessions if necessary. It generally operates according to the principles of unanimity and the “one member, one vote” principle, with each country paying a contribution equal to the annual budget. However, given that Saudi Arabia is by far the world's largest and most profitable oil exporter, with sufficient capacity to operate as a traditional backup producer to balance the global market, it serves as a "leader de facto OPEC. International cartel On several occasions, OPEC members have demonstrated apparent anti-competitive cartel behavior through the organization's agreements on oil production and price levels. In fact, economists often cite OPEC as an example of a cartel that cooperates to reduce market competition. OPEC members clearly prefer to describe their organization as a modest market-stabilizing force rather than a powerful anti-competitive cartel. In its defense, the organization was founded as a counterweight to the previous "Seven Sisters" cartel of multinational oil companies, and non-OPEC energy suppliers retained enough market share to allow a substantial degree of global competition. Additionally, due to an economic "prisoner's dilemma" that encourages each member country individually to cut prices and exceed its production quota, widespread cheating within OPEC often erodes its ability to influence global prices. oil through collective action. OPEC has not been involved in any disputes related to World Trade Organization competition rules, even though the goals, actions and principles of the two organizations diverge significantly.[28] A key U.S. district court decision has held that consultations with OPEC are protected as “governmental” acts of state under the Foreign Sovereign Immunities Act and therefore fall outside to the legal scope of American competition law governing “commercial” acts. Despite popular sentiment against OPEC, legislative proposals to limit the organization's sovereign immunity, such as the NOPEC Act, have so far failed. OPEC often finds it difficult to agree on policy decisions because its member countries differ significantly in terms of oil export capacities, production costs, reserves, geological characteristics, population, economic development , budgetary situations and political circumstances. Indeed, over the course of market cycles, oil reserves can themselves become a source of serious conflict, instability and imbalances, in what economists call the “natural resource curse”. Another complication lies in the fact that theReligious conflicts in the Middle East are recurring features of the geopolitical landscape of this oil-rich region. Conflicts of international significance in OPEC's history include the Six-Day War (1967), the Yom Kippur War (1973), a hostage siege led by Palestinian militants (1975), the Iranian Revolution (1979), the Iran-Iraq war (1980-1988). ), Iraqi occupation of Kuwait (1990–1991), 9/11 attacks carried out primarily by Saudi hijackers (2001), US occupation of Iraq (2003–2011), Niger Delta conflict (2004 -present), Arab Spring (2010-2012). ), the Libyan crisis (2011-present) and the international embargo against Iran (2012-2016). Although such events can temporarily disrupt oil supplies and raise prices, frequent conflicts and instabilities tend to limit OPEC's long-term cohesion and effectiveness. Market Information An area in which OPEC members have been able to productively cooperate over the decades, the organization has significantly improved the quality and quantity of information available in the international oil market. This is particularly useful for a natural resource industry that requires months and years of careful planning to operate smoothly. Publications and research In April 2001, OPEC collaborated with five other international organizations (APEC, Eurostat, IEA, OLADE, UNSD) to improve the availability and reliability of oil data. They launched the Joint Oil Data Exercise, which the IEF joined in 2005 and renamed the Joint Organizations Data Initiative (JODI), covering more than 90 percent of the global oil market. GECF joined the company as its eighth partner in 2014, enabling JODI to also cover almost 90% of the global natural gas market. Since 2007, OPEC has annually published the World Oil Outlook (WOO), in which it presents a comprehensive analysis of the global oil industry, including medium- and long-term projections of supply and demand. . OPEC also produces an "Annual Statistical Bulletin" (ASB) and publishes more frequent updates in its "Monthly Oil Market Report" (MOMR) and the "OPEC Bulletin". Crude Oil Benchmarks A “crude oil benchmark” is a standardized petroleum product that has served as a convenient reference price for buyers and sellers of crude oil, including standardized contracts on major futures markets since 1983. The benchmarks are used because oil prices differ (usually by a few dollars per barrel) depending on variety, grade, date and location of delivery, and other legal requirements. The OPEC crude reference basket has been an important benchmark for oil prices since 2000. It is calculated as a weighted average of the prices of oil blends from OPEC member countries: Saharan Blend (Algeria), Girassol ( Angola), Oriente (Ecuador). , Rabi Light (Gabon), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light ( Saudi Arabia), Murban (UAE) and Merey (Venezuela). North Sea Brent crude oil is the primary benchmark for Atlantic Basin crude oils and is used to price approximately two-thirds of the world's traded crude oil. Other well-known references are West Texas Intermediate (WTI), Dubai Crude, Oman Crude and Ural oil. Spare Capacity The U.S. Energy Information Administration, the statistical arm of the U.S. Department of Energy, defines spare capacity for crude oil market management "as the 2007..