OPEC meeting
Find out about the Organisation 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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OPEC meeting
Find out about the Organisation of the Petroleum Exporting Countries (OPEC) meeting and announcement – including why it’s important for traders and its effect on global oil prices.
Call 0800 195 3100 or email newaccountenquiries.uk@ig.com to talk about opening a trading account. We’re available from 8am to 6pm (UK time), Monday to Friday.
Contact us: 0800 195 3100
Today’s OPEC meeting
Today’s OPEC meeting (3pm 9 April 2020) is expected to result in dramatic production cuts for OPEC member states and affiliated non-members. Cuts are estimated to range between a low of 8 million barrels a day, and a high of 15 million barrels a day over a 90-day period.
A production cut would signal an attempt to end the current price war and stabilise the price per barrel during the ongoing coronavirus pandemic.
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How does the OPEC meeting affect traders?
The OPEC meeting affects traders because oil production quotas for OPEC member states and certain non-voting observers are set during the session. These quotas can have a strong impact on the global supply of oil and influence its price. This is because OPEC members control 79.4% of proven crude oil reserves, and the organisation supplied approximately 44% of the world’s oil.1
The quotas set at OPEC meetings can also affect demand in other energy markets, including natural gas and heating oil. This makes OPEC meetings important dates in some traders’ calendars.
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How does OPEC change the oil price?
OPEC aims to control 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 raise their production quotas to increase supply. Assuming demand remains constant, the price of oil will move in the intended direction.
Despite OPEC’s best efforts to control the price of oil, there can be occasional short-term price spikes because of global crises.
These include events such as the September 2019 Abqaiq-Khurais attack which struck a Saudi Arabian oil processing facility. The fallout cut Saudi oil production by around half until early October 2019 and caused global oil prices to climb.
Traders may therefore want to consider other economic data and news sources, in addition to the latest OPEC quotas, before speculating on 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.’
However, it should be remembered that OPEC does act 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 on new production volumes. Reaching a consensus is not easy as member countries will generally seek to maximise their own production levels while limiting production levels in other countries.
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.
Get the latest OPEC news
-
Gold price attempts to recover but WTI crude price and natural gas price fall
2024-12-06T08:50:25+0000 -
Brent crude oil price drops, silver price tests resistance and wheat bounces off three-month low
2024-12-05T08:46:40+0000 -
Brent crude oil price recovers ahead of OPEC+ meeting as silver, wheat prices also level out
2024-12-03T08:49:41+0000 -
OPEC meeting format
Ordinary meetings are held twice a year, at the organisation’s headquarters in Vienna. Generally, these meetings are six months apart. Extraordinary meetings – which occur outside of the biannual schedule – can also be arranged for matters that cannot wait until the organisation is next meant to meet.
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 2024
Event |
Date |
OPEC Monthly Report |
September 10 |
OPEC Monthly Report |
October 14 |
OPEC Monthly Report |
November 12 |
OPEC Monthly Report |
December 11 |
What happened at the last OPEC meeting?
OPEC+ members met in June 2024. They agreed to extend various supply cuts: group-wide cuts of 2m b/d and voluntary reductions of 1.66m b/d from nine members were extended until the end of 2025, while additional voluntary cuts of 2.2m b/d were extended to September 2024.
The UAE also received an increased production target for 2025. These decisions are expected to create a market deficit for the remainder of 2024, which has the potential to drive oil prices higher, especially during the peak demand period of the third quarter.
However, the planned return of supply from October 2024 through 2025 could lead to a marginal surplus in 2025. While these decisions provide short-term market clarity, there remains uncertainty about how OPEC+ will react to market dynamics in the longer term, balancing between maintaining prices and market share.
Which countries are members of OPEC?
When OPEC was formed in 1960, it had five founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Since then, the organisation has grown to include 12 member countries as of August 2024.
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, but they do not get a vote.
Other major producers – Mexico and Kazakhstan – also sometimes attend OPEC meetings as non-voting observers to coordinate production levels. These countries can also have an effect on the outcome of OPEC meetings.
| Country | Date joined |
| Saudi Arabia | 1960 |
| Iran | 1960 |
| Iraq | 1960 |
| Venezuela | 1960 |
| Kuwait | 1960 |
| Libya | 1962 |
| United Arab Emirates | 1967 |
| Algeria | 1969 |
| Nigeria | 1971 |
| Gabon | 1975 |
| Equatorial Guinea | 2017 |
| Republic of the Congo | 2018 |
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With 50 years of experience, we’re proud to offer a truly market-leading service
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 12 member countries. These quotas are important because they affect the global supply of oil and, in turn, its price.
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