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News:
Qatar has announced its decision to move out of Organisation of the Petroleum Exporting Countries (OPEC) on January 1st 2019
Important Facts:
What is OPEC?
- The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organization of oil producing nations.
- It was formed in 1960 in Baghdad to negotiate with oil companies on matters like oil production and price.
- The members of OPEC include: Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Indonesia, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador, Gabon, Angola, Equatorial Guinea and Congo.
- OPEC’s key goal is to safeguard the interests of member countries and maximise their profit from oil exports.
- OPEC influences global petroleum prices by fixing a production quota for its members.
Criticisms of OPEC:
- Over-dependence on oil is the major problem of OPEC countries.
- Critics allege that there has been strong influence of Western countries like USA on OPEC. At present, with the withdrawal of West’s support to OPEC and its reduced dependence on OPEC, its relevance has decreased.
Why Is Qatar Leaving OPEC?
- Decisions of OPEC are largely unilateral as they are guided by Saudi Arabia with whom Qatar does not share a cordial diplomatic relation.
- Also, at present, Qatar is among the largest exporters of natural gas and is no longer dependent solely on oil.
Is OPEC’s Relevance Declining Over the Years?
Compared with the 1970s, OPEC’s influence on the global energy market has significantly reduced due to:
- Technological advancement and discovery of other energy resources in the West
- Withdrawal of Western support and increasing non-OPEC induced oil price fluctuations
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