The Organization of the Petroleum Exporting Countries (OPEC) And Why is it important for developing nations

The Organization of the Petroleum Exporting Counties (OPEC) is an intergovernmental organization of 12 oil producing countries which are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, The United Arab Emirates and Venezuela. The principal goal of OPEC is to safeguard the organization interest individually and collectively. It ensures the stabilization of prices in international oil markets by eliminating harmful and unnecessary fluctuation. OPEC decided to keep unchanged the group’s production ceiling of 30 million barrels a day for its 12 members. As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production capacity affording them some control over the global market. OPEC’s objective is to co-ordinate and unifies petroleum policies among member countries in order to secure fair economic and regular supply of petroleum to consuming nations and a fair return on capital to those investing in the industry. OPEC became prominent in supporting the oil sector as part of global efforts to address the economic crisis.

OPEC helped developing countries to come together to solve the problems facing poor countries and helps them to establish a better economic system by allowing increased trade and exchange of knowledge. The concept OPEC established the OPEC fund for International Development (OFID) in January 1976. Their purpose is to promote the cooperation between OPEC member countries and other developing nations by helping poorer low-income non- OPEC countries in their social and economic advancement. This is active in Africa, Asia, Europe and Latin America by providing a wide range of projects like providing clean water and energy to remote communities, to build schools, hospitals, roads, farming and trade opportunities. In between 1973 and 2010, OPEC provided over $347 billion in development assistance to other developing countries and as of today 130 countries from developing world have benefited from OFID assistance.

OPEC has enough power to dictate a price level and maintain it through production policy. OPEC spokesmen mention that “ the world’s largest donors of financial assistance to developing counties and contribute the majority of funds for the World Bank and IMF borrowings. It is also believed that OPEC countries can and will provide the means for non- oil developing countries to realize their target for economic development.

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