What Does Opec Agreement Mean

The United States, which is not participating in OPEC meetings, had pushed Moscow and Riyadh to reach an agreement. President Trump met Thursday on a conference call with Russian President Vladimir Putin and Saudi King Salman, White House aide Dan Scavino said on Twitter. Russia not only wants to meet the demands of OPEC insiders, but also impose its own change: OPEC`s accounting rules on how gas contributes to oil quotas, a step that could allow Russia to effectively increase its oil production under the current agreement. OPEC often finds it difficult to make policy decisions because its member countries are very different in terms of oil export capacity, production costs, reserves, geological characteristics, population, economic development, fiscal situation and political circumstances. [88] [82] In fact, during market cycles, oil reserves can become a source of serious conflict, instability and imbalance, what economists call the “curse of natural resources.” [153] [154] Another complication is that religious conflicts in the Middle East are recurring features of the geopolitical landscape of this oil-rich region. [155] [156] Among the major international conflicts in OPEC history were the Six-Day War (1967), the Yom Kippur War (1973), a hostage-taking by Palestinian militants (1975), the Iranian revolution (1979), the Iran-Iraq war (1980-1988), the Iraqi occupation of Kuwait (1990-19191), 11. September Attacks of most Saudi kidnappers (2001), the American occupation of Iraq (2003-2011), the conflict in the Niger Delta (2004-present Arab Spring (2010-2012), the Libyan crisis (2011-present) and the international embargo against Iran (2012-2016). While events such as this may temporarily disrupt oil supplies and increase prices, disputes and frequent instabilities limit OPEC`s long-term cohesion and effectiveness. [157] In 1982, in order to combat declining oil sales revenues, Saudi Arabia pushed OPEC to obtain controlled domestic production quotas to limit production and boost prices. When other OPEC countries failed to comply, Saudi Arabia first reduced its own production from 10 million barrels per day in 1979-81 to only one-third of that level in 1985. When this proved ineffective, Saudi Arabia reversed course and flooded the market with cheap oil, causing prices to fall below $10/bbl and making more expensive producers unprofitable.

[54] [56]:127-128,136-137 Faced with growing economic distress (which ultimately contributed to the collapse of the Soviet bloc in 1989) [57], “liberated” oil exporters began, which had not previously complied with OPEC agreements, and finally limited production to support prices, on the basis of carefully negotiated national quotas that, since 1986, had been aimed at offsetting oil and economic criteria. [54] [59] (Within their state-controlled territories, the national governments of OPEC members are able to impose production restrictions on public and private oil companies). [60] In general, oil prices rise when OPEC production targets are reduced. [61] The Nigerian Ministry of Petroleum Resources said in a statement that further planned reductions would be planned in the agreement, meaning that 8 million barrels per day will be reduced from July to the end of the year and 6 million barrels for 16 months from 2021.