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Organization of the Petroleum Exporting Countries
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Organization of the Petroleum Exporting Countries
Key Terms associated with Topic and Reasons for Interest
When it comes to understanding the management of petroleum and gas across the globe,
it becomes important to focus on the role played by organizations such as OPEC. OPEC has been
known to bring together all oil-producing countries in the international community. Since its
foundation in the 1960s, it focused on oil management. It understands the aspect of mining and
pricing oil and petroleum. Over the past century and a half, the management of oil production
plays a major role in eliminating pollution and eradicating conflicts among countries regarding
managing petroleum and oil across the globe. This makes it possible for the development of a
more focus on different areas of development concerning the organization.
The Key Terms associated with the Study
Global markets are known to depend entirely on oil and petroleum production through
different national and private companies. With this, petroleum has been known to raise a
significant amount of revenues to support economic systems. In this case, an example may
include Saudi Arabia, which is among the largest producers of oil and petroleum across the
globe. The country’s national economy depends on the various oil barrels produced in the oil
fields in its different parts. OPEC ensures that it contributes significantly to the country and its
allies when managing its oil resources. This has brought a lot of significance in its existence in
the country.
Major Article Summary
Pierru, Smith, & Zamrik (2018) focus on the Organization of the Petroleum Exporting
Countries (OPEC). The article provides significant information regarding the establishment of
the organization in 1961 in Baghdad. With that, it reiterates that the organization has been
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structured to allow most of the petroleum-producing countries to join it if they sign their
mandatory policy framework. The article's major functions look into the coordination of oil
production in ensuring that there is the stabilization of the oil markets. The other function is to
ensure a return on oil investment among countries that produce oil in the international
community. As a result of the increasing oil products, the organization has ensured that it
influences economies' growth by discussing any existing and impending changes in the market.
Despite its powerful position, OPEC does not have a direct influence on oil and
petroleum prices. The theory of supply and demand is seen to influence the production of oil
significantly. The article has ensured that it looks into the decisions that are made by member
countries of OPEC. Social, economic, and political influences are significant in ensuring that
OPEC makes the right decisions in dealing with countries' membership and the prices of oil. The
article provides more than enough data regarding the organizational structure and decision-
making framework associated with the organization. It defines its membership and how they
influence the development of the countries that influence decision-making. It is also crucial to
focus on the secretariat's position in the management and operations of the organization. The
article has shown significant data regarding the organization's developments about the changes
that have been instrumental in influencing its powerful position compared to other resource-
based organizations in the international community.
Discussions of the Articles
When it comes to understanding the above explanation, it is important to look into the
organization as more political than economic. It is crucial to note that the secretariat is operated
by the most powerful nations that produce the resource the most. In this case, the countries with
the highest gallons of oil daily have the highest possibility of governing the body as the head
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secretariat. OPEC has approximately 11 oil-exporting nations. Most of its members are
developing nations with permanent sovereignty over their natural resources, mostly petroleum,
as per the United Nations resolutions. The United Nations influences OPEC to ensure that
despite its members having overall control of their petroleum, they may exploit them sensibly
and responsibly. As learned from the course this week, the importance of the organization is that
it is operated under the OPEC statute that has been functioning since 1965. The Statute has been
crucial in influencing and defining the principal objectives of the organization. It coordinates and
unifies the member countries’ petroleum policies. The organization remains focused on ensuring
revenues are collected in the right manner and through an ethical framework.
Pierru, Smith, & Zamrik (2018) reiterates that the organization is important in current
petroleum management. The relation between the article and the four others focuses on the
objectives of OPEC. The four articles signify the organization's status as one that tends s to
accommodate the interests of the member parties. It also brings on board the different non-OPEC
producers to work collaboratively to deal with petroleum production and management (Mensi,
Hammoudeh, & Yoon, 2014). In this case, the market demand, absence of disturbance on the
supply of petroleum, and maintenance of stable price ranges are crucial in the market
(Alkhathlan, Gately, & Javid, 2014). OPEC ensures that there is an important dynamic ingredient
established to promote the stability of economic activities. Ghassan & AlHajhoj (2016) argues
that the alignment of national social, economic, and political developments for a center stage in
the organization's operations. It ensures that countries with conflicts regarding petroleum are
dealt with through the United Nations and regional organizations focusing on justice Liu, Dong,
& Failler, 2019). With this, it becomes crucial to focus on introducing the right frameworks to
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initiate proper conduct among member and non-OPEC countries. The organization influences
influencing an effective operation in the oil production and accessibility in the market.
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References
Alkhathlan, K., Gately, D., & Javid, M. (2014). Analysis of Saudi Arabia's behavior within
OPEC and the world oil market.BEnergy Policy,B64, 209-225.
Ghassan, H. B., & AlHajhoj, H. R. (2016). Long run dynamic volatilities between OPEC and
non-OPEC crude oil prices.BApplied Energy,B169, 384-394.
Liu, Y., Dong, H., & Failler, P. (2019). The oil market reactions to OPEC’s
announcements.BEnergies,B12(17), 3238
Mensi, W., Hammoudeh, S., & Yoon, S. M. (2014). How do OPEC news and structural breaks
impact returns and volatility in crude oil markets? Further evidence from a long memory
process.BEnergy Economics,B42, 343-354.
Pierru, A., Smith, J. L., & Zamrik, T. (2018). OPEC’s impact on oil price volatility: The role of
spare capacity.BThe Energy Journal,B39(2).
