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The OPEC Plus alliance came 56 years after the establishment of the Organization of the Petroleum Exporting Countries (OPEC), and included - in addition to the 13 main members of the organization - 10 other countries with the aim of reducing oil production to improve oil prices in the markets.
This alliance between OPEC and OPEC Plus has a significant impact on oil prices globally, so the decisions and outputs of their meetings are constantly anticipated and followed.
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Establishment
With the aim of reducing oil production to improve oil prices in the markets, especially after the significant decline in oil prices due to large increases in shale oil production in America in 2011, OPEC Plus was established on November 30, 2016, and signed an agreement with 10 oil-producing countries that are not the main members, most notably Russia, the third largest oil producer in the world, and they have since become known as "OPEC Plus".
The organization announced its goal of "coordinating and unifying oil policies among member states" to secure pricing for producers, supplies for consumers, and return on capital for investors.
Members
OPEC core members: Saudi Arabia, Algeria, Angola, Congo, Equatorial Guinea, Iran, Iraq, Kuwait, Libya, Nigeria, UAE, Venezuela and Gabon. Indonesia suspended its membership in 2009, and Qatar withdrew in 2019 and Ecuador in 2020.
The ten members who joined the formation of OPEC Plus: Russia, Azerbaijan, Bahrain, Brunei, Malaysia, Kazakhstan, Mexico, Oman, Sudan and South Sudan.
Importance
OPEC controls 40% of the world's oil supply and 80% of the world's reserves, and with OPEC Plus, they control 55% of the world's supply and 90% of reserves.
Because of the organization's market share, its decisions affect the global market, and OPEC and its ally OPEC Plus meet periodically to regulate the amount of crude oil that will be put on the market.
Kate Dorian of the UK Energy Institute said "OPEC Plus is introducing a supply and demand mechanism with the aim of creating balance in the market," and when demand for oil declines, the alliance keeps prices high by cutting supplies.
Stations
Following the unstable conditions in the global economy in the second half of 2014, as a combination of speculation and increased supply and demand led to a contraction in the oil market, OPEC members met with 10 other oil-producing countries to rebalance the market in 2016, and OPEC Plus emerged.
OPEC announced in November 2016 that it was starting production cuts to control prices, with pledges of OPEC Plus compliance.
Saudi Arabia cut production by 500 barrels per day and Russia by 350 barrels. The formal charter of the agreement between OPEC and its partners was reached at a meeting in Vienna in July 2019.
In the presence of the ten members who joined it to form OPEC Plus, OPEC held its fifth (2012), sixth (2015) and seventh (2018) international seminars respectively, bringing together an unprecedented number of representatives of producing and consuming countries, national and international oil companies, as well as journalists and industry analysts.
Following the global impact of the COVID-19 pandemic, OPEC Plus focused on reducing oil production to help stabilize oil prices, which led to a significant drop in demand and oil prices.
In 2021, oil production in OPEC rose to 27.882 million barrels per day, more than OPEC Plus by about 116,<> barrels per day, so the global oil market was affected, until the two organizations decided to cooperate and reduce the rate of production by about two million barrels, in order to limit the rise in global oil prices to balance the deficit caused by Russia in its war on Ukraine. As a result, the largest and longest voluntary production adjustments in the history of the oil market took place.
Three OPEC Plus member countries were excluded from the cuts due to economic and political hardship, namely Venezuela and Iran, which are under US economic sanctions, as well as Libya, which has been in conflict for a long time.
The importance of these efforts has been recognized by many States and organizations, including the energy ministers of the Group of Twenty, Argentina, Brazil, Canada, Colombia, Norway, the African Petroleum Producers Organization, the International Energy Agency, the International Energy Forum and many independent producers.
Russia's oil production remained above 10 million barrels per day in 2022 despite the sanctions imposed on it following its war on Ukraine in 2022, knowing that Russia's production and impact on the market are much greater than the production of other OPEC plus countries, so it is the biggest influence from this nascent alliance on OPEC decisions.
Together, OPEC and OPEC Plus produced about 59% of the world's oil, or approximately 48 million barrels per day for 2022, thus affecting the balances of the global oil market and oil prices more than ever.
In April 2023, OPEC Plus members agreed to cut oil production by 1.2 million barrels per day until the end of the year. OPEC Plus countries then agreed on November 30 to cut global oil production on the global market by about 2.2 million barrels per day in the first quarter of 2024, including extending voluntary cuts from Saudi Arabia and Russia by 1.3 million barrels per day.
Source : Al Jazeera + Websites