7 Things You Must Know About the Price of Oil

4. OPEC affects the price of oil

OPEC is the Organization of Petroleum Exporting Countries (OPEC), is a cartel of countries made up of 13 of the world’s biggest oil-producing nations, including all of the major Middle Eastern countries, Venezuela and Nigeria. This cartel controls more than 80% of the world’s known oil reserves. Since OPEC’s nations produce so much of the world’s oil supply, they can manipulate the price of oil per barrel depending upon how many barrels per day the group will sell on the world oil market. If OPEC wants the price of oil to rise, they can reduce the amount of oil being produced and supplied to the world market. And if they want the price to dip they can release more barrels to the market so that supply goes up and price goes down.

While Canada, Russia, America and other “Non-OPEC” producers can also increase supply of oil into the market, they cannot affect world prices nearly as effectively as OPEC because of OPEC’s cumulative effect of strong oil producing nations. They are simply too big and therefore have a dominant position when it comes to impacting oil market price.

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