The Organisation of the Petroleum Exporting Countries (OPEC) is an intergovernmental organisation, created in 1960, by 13 oil-producing countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. The five Founding Members were later joined by: Qatar, Indonesia, Libya, United Arab Emirates, Algeria, Nigeria, Ecuador, Angola, Equatorial Guinea, and Congo.
The OPEC's objective is to coordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic, and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.
OPEC’s Influence on Oil Prices:
So does OPEC really influence Oil Prices globally? Short answer, Yes, but only to an extent...
OPEC member countries collectively agree on the quantity of oil to produce, which directly impacts the global supply of crude oil. OPEC tends to keep prices relatively high in order to maximise profitability.
If any country is still unsatisfied with the price it receives, it could cut its supply so that prices rise. But realistically, no country would do that as by reducing supply, their revenues would start to fall almost immediately.
Saudi Arabia and Russia are two of the largest oil exporters in the world and they have the ability to increase supply in the short run to increase their revenues. A slight change in oil prices by Saudi Arabia would cause an instant much greater price change globally.
OPEC and The Ukraine War:
“OPEC is on the wrong side of history in sticking with Russia,” -Ukraine's Naftogaz CEO in an interview with CNBC.
Saudi Arabia had previously said that the group would “keep politics out of its output decisions”. The OPEC firmly stands ground to their policy and has not taken any actions against Russia yet.
In March, Saudi Arabia’s Energy Minister said “OPEC’s very existence was dependent on the separation of its mission to stabilise oil prices from other geopolitical factors,” in response to rising questions about its “outdated” policies stopping them from imposing sanctions on Russia.
Whilst Governments all around the world have imposed unprecedented punitive sanctions on Russia, the OPEC is not planning to take any action yet.