Skip to content

CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

OPEC definition

What is OPEC?

OPEC is the Organisation of the Petroleum Exporting Countries. It was founded in 1960 by Saudi Arabia, Venezuela, Iraq, Iran and Kuwait. The other countries that have joined OPEC since are Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon, Angola, Equatorial Guinea and the Republic of the Congo – bringing OPEC’s membership to 14, as of January 2019.

Find out about OPEC meetings

Learn more about the OPEC meeting and why it's important for traders.

For many commentators, OPEC is a cartel in the sense that it regulates the supply of oil in the hope of controlling the price. OPEC does this by holding biannual meetings to set the oil production quotas for its member countries.

In the past, OPEC’s dominance over the production of oil meant that the organisation was considered to be very powerful. Even today, OPEC member countries control around 80% of the world’s proven oil reserves.1 However, the rise of the American fracking industry has raised questions about whether OPEC’s control over the price of oil is weakening.

What does OPEC do?

Broadly speaking, OPEC has three main goals.

  1. The first is to keep oil prices stable by coordinating its members’ oil production through quotas. The theory is that by controlling supply, OPEC will be able to have greater influence over the price of oil on the world market.
  2. The second of OPEC’s goals is to reduce oil price volatility, in the hope of making the production and supply of oil as profitable as possible for OPEC members. It also helps to stave off competition from the growing American fracking industry, as well as from non-OPEC and non-OPEC-affiliated countries.
  3. The final goal of OPEC is to adjust the supply of oil to combat surpluses and shortages which, in turn, can help reduce the volatility of oil’s price on international markets.

Learn more about OPEC meeting

Build your trading knowledge

Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - R - S - T - U - V - W - Y

See all glossary trading terms

Help and support

Get answers about your account or our services.

Get answers

Or contact us on +971 (0) 4 559 2104 or helpdesk.ae@ig.com.

Our office is open 5 days a week, Monday to Friday from 8am to 7pm (Dubai time). Support line is available 24hrs a day, 7 days a week, except for Saturday from 1am to 11am (Dubai time).