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The Organization of Petroleum Exporting Countries (OPEC) is a group consisting of 12 of the world’s major oil-exporting nations. OPEC was founded to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. In the short term, the Organization of Petroleum-Exporting Countries (OPEC) has significant influence on the price of oil. Over the long term, its ability to influence the price of oil is quite limited, primarily because individual countries have different incentives than OPEC as a whole. However, in time the price migrates lower as supply is not meaningfully cut. In the end, the forces of supply and demand determine the equilibrium price. OPEC announcements can temporarily affect the price by altering expectations. In recent years, OPEC’s share of world oil production has declined, especially with new production coming from the United States and Canada. Oil prices averaged above $100 per barrel between 2007 and 2014 due to geopolitical tensions, increased demand and tight supply. This elevated price of oil created huge incentives for innovation in new production techniques that led to oil extraction and more effective drilling techniques.
Oversupply later lead to a crash in crude resulting in prices as low as $40-50 per barrel. This has led to new non-OPEC supply that has dented OPEC’s ability to influence oil prices, which caused oversupply and a subsequent crash with prices as low as $37 per barrel. The 2017 OPEC World Oil Outlook (WOO) was launched at the OPEC Secretariat in Vienna.
Some highlights by OPEC in their 2017 OPEC World Oil Outlook were
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