Understanding OPEC: An Economic Analysis

Understanding the Organization of Petroleum Exporting Countries: Economic Analysis Over the past few months people have been saying a lot about the invasion of Iraq in Kuwait in 1990. Interestingly, one of the motives for Iraq is economics. Because Kuwait violates the economic policy of the Organization of Petroleum Exporting Countries and exports oil beyond its quota, it excuses war against Iraq. This is only one chapter in the complex history of OPEC. The Organization of Petroleum Exporting Countries is an international international organization coordinating and harmonizing the oil policies of eleven countries, enjoying high prices over the past decades and overcoming the stagnation of oil prices.

In this article, I will talk about OPEC and try to analyze it using various economic theories. In addition to this, I also talked about some important documents on "OPEC as a cartel". This gives us a deeper understanding of the various economists' views on OPEC. Furthermore, the comparison between OPEC and other cartels is also to emphasize some of the main differences between OPEC and other traditional cartels. When a company learns to cooperate, there may be cartel actions. Cartel is a way to earn more money by driving the price to monopoly on the demand curve. The results of the cartel compared to the uncooperative result of the Cournot model are shown in 1 below (provided by Peter Swann slide). Due to the collapse of trust, cartels may collapse under pressure

The purpose of this document is to determine whether OPEC is a successful cartel. In other words, it is necessary to consider the pros and cons of the Petroleum Exporting Country Organization during petroleum supply. This allows you to make an appropriate judgment as to whether OPEC is a successful cartel. The war ended soon, but OPEC never lost the impact of the economic downturn. At that time, OPEC member countries supplied more than 60% of the global oil demand and had an allocation system that limits the production capacity of each member country. By slightly lowering production levels before 1973, they were able to raise the average price of petroleum to about $ 13 (as shown in the table above).

OPEC is headquartered in Vienna, primarily receiving the fact that Western oil companies are trying to lower crude oil prices. OPEC enables oil producing countries to secure revenue by adjusting policies and prices. From the perspective of the global community, OPEC members have gained some country prestige. We have always believed that the history of the United States poses a threat to its cheap energy supply as the Organization of Petroleum Exporters is satisfied with setting high oil prices in the world market. In addition, the current US policy of lowering OPEC-led Middle Eastern oil dependence may bring diplomatic problems to countries related to the interests of the United States.