What is OPEC+ and how does it affect oil prices?

The coalition known as OPEC+, consisting of the Organization of the Petroleum Exporting Countries (OPEC) and allied nations such as Russia, is scheduled to convene on June 2 to discuss their collective oil production policy. Below are essential details regarding OPEC+ and its functions:

WHAT IS OPEC AND OPEC+?

OPEC was established in 1960 in Baghdad by Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela with the objective of coordinating petroleum policies to ensure fair and stable prices. Presently, it comprises 12 countries, primarily from the Middle East and Africa, contributing to approximately 30% of the world’s oil supply.

Over the years, OPEC has faced challenges to its influence, often leading to internal divisions. Additionally, the global shift towards cleaner energy sources and away from fossil fuels could potentially reduce its dominance.

In 2016, OPEC formed the OPEC+ coalition, which includes 10 major non-OPEC oil exporters, including Russia. OPEC+ collectively accounts for about 41% of global oil production, with Saudi Arabia and Russia being the primary producers, contributing approximately 9 million and 9.3 million barrels per day (bpd) of oil, respectively.

Angola, a member since 2007, exited the bloc earlier this year due to disagreements over production levels. Ecuador withdrew from OPEC in 2020, followed by Qatar in 2019.

HOW DOES OPEC INFLUENCE GLOBAL OIL PRICES?

OPEC asserts that its member states’ exports constitute around 49% of global crude exports, with member countries holding approximately 80% of the world’s proven oil reserves, according to OPEC estimates.