In the 1990s, OPEC lost its two new members, who had joined it in the mid-1970s. Ecuador withdrew in December 1992 because it was unwilling to pay the $2 million annual fee and felt it needed to produce more oil than it was allowed under the OPEC quota,[65] despite its re-accession in October 2007. Similar concerns led Gabon to suspend its accession in January 1995; [66] She returned in July 2016. [2] Iraq has remained a member of OPEC since the organization`s inception, but Iraqi production was not part of OPEC`s quota agreements from 1998 to 2016 due to the country`s enormous political difficulties. [67] [68] In order to combat declining revenues from oil sales, Saudi Arabia urged OPEC in 1982 to verify domestic production quotas in order to limit production and raise prices. When other OPEC countries failed to comply, Saudi Arabia initially cut its own production from 10 million barrels per day in 1979-1981 to just one-third that level in 1985. After the signing of the original agreement establishing OPEC, it was registered with the United Nations Secretariat on 6 November 1962, in accordance with UN Resolution No. 6363. Although oil-importing countries have been slow to react to price increases, they have ended up reducing their overall energy consumption, found other oil wells (. B for example in Norway, the United Kingdom and Mexico) and have developed alternative energy sources such as coal, natural gas and nuclear energy. In response, OPEC members – particularly Saudi Arabia and Kuwait – cut production in the early 1980s, proving to be a futile attempt to defend their published prices.
The two main objectives of the OPEC/non-OPEC production agreement are (1) to reduce global excess production, which reached a surplus of 1.5 million barrels per day in 2015, and (2) to reduce oil inventories, which were at record levels. The OPEC side of the deal set production quotas at the national level for 11 of the then 13 active members (excluding Libya and Nigeria), which would reduce crude oil production by nearly 1.2 million barrels per day compared to October 2016. For the 11 non-OPEC countries that have committed to cutting oil production, the agreement set a cumulative reduction target of 558,000 bpd for the group (no country-specific reduction target) compared to October 2016 production. In early March 2020, OPEC officials gave Russia an ultimatum to cut production by 1.5 percent of global supply. Russia, which had expected continued cuts as U.S. shale oil production increased, rejected demand and ended the three-year partnership between OPEC and major non-OPEC suppliers. [114] Another factor has been the weakening of global demand due to the COVID-19 pandemic. [115] This also led “OPEC plus” not to renew the 2.1 million barrels per day reduction agreement, which was due to expire at the end of March. Saudi Arabia, which absorbed a disproportionate portion of the cuts to persuade Russia to stay in the deal, told its buyers on March 7 that they would increase production and withdraw their oil in April. This led to a collapse in the price of Brent crude oil of more than 30% before a slight recovery and widespread turbulence in financial markets. [114] Approval of a new member country requires the approval of three-quarters of opec`s current members, including the five founders.
[123] In October 2015, Sudan formally applied for membership[124] but is not yet a member. When OPEC members grew tired of multi-year supply competition with declining yields and declining financial reserves, the organization finally attempted its first production cut since 2008. Despite many political hurdles, the September 2016 decision to cut about 1 million barrels per day was codified by a new quota agreement at the OPEC conference in November 2016. The deal (which excluded struggling members Libya and Nigeria) covered the first half of 2017 – alongside cuts promised by Russia and ten other non-members offset by expected increases in the US shale sector, Libya, Nigeria, spare capacity and an increase in OPEC production in late 2016 before the cuts went into effect. .