Atlas Macro

Markets

OPEC

The Organization of the Petroleum Exporting Countries, a group of oil producers led by Saudi Arabia that coordinates output to influence prices. Since 2016 it has worked with other producers led by Russia as OPEC+.

Key points

  • OPEC+ produces around 40% of the world's oil.
  • Agreed output cuts tend to raise prices; fights for market share can make them collapse.
  • Its meetings and announcements can move oil prices by several percent in a day.

Example

If OPEC+ agrees to cut output by 1 million barrels a day, about 1% of world supply, oil prices typically rise unless demand is already weakening.

In history

In 1973 Arab members of OPEC embargoed oil exports to the US and others, quadrupling prices. In 2014-16, and briefly in March 2020, fights over market share sent oil sharply lower.

Related terms