What OPEC is and how it works

The test, and who applies it

The statute drawn at the Baghdad Conference between 10 and 14 September 1960 makes membership a decision rather than a measurement. Article 7 admits any country with a substantial net export of crude petroleum, and interests fundamentally similar to those of the member countries, on a majority of three-fourths of full members that has to include the concurring votes of all founder members. Iran, Iraq, Kuwait, Saudi Arabia and Venezuela met at Baghdad, and that clause has kept those five at the gate ever since.

Article 11 then flattens what happens once a country is through it. Each full member country has one vote, and every decision of the Conference other than a procedural one requires the unanimous agreement of all full members. A country arrives by a qualified majority with five standing consents attached to it, and then votes on exactly the same terms as the members that let it in.

Geneva, then Vienna

The Secretariat spent the first five years in Geneva and moved to Vienna on 1 September 1965. The statute creates three organs and no more: the Conference of ministers, a Board of Governors on which each member country is represented, and the Secretariat, which compiles rather than decides. The Monthly Oil Market Report and the Annual Statistical Bulletin come out of that office, and so does the daily price of the reference basket.

The claim of 1968

Resolution XVI.90, adopted at the sixteenth Conference in Vienna on 24 and 25 June 1968 as the Declaratory Statement of Petroleum Policy in Member Countries, states the ground the whole arrangement stands on: the inalienable right of all countries to exercise permanent sovereignty over their natural resources in the interest of their national development. The renegotiated concessions and the nationalisations of the following decade were argued from that text.

It is also why the organisation owns nothing. The barrels belong to the member states and to the companies those states own, and the Vienna Secretariat keeps the accounts of a policy rather than the title to a commodity.

The basket

What every member contributes in kind is a grade of crude. The OPEC Reference Basket, introduced on 16 June 2005, is a weighted average of the spot price of one named grade from each member country: Saharan Blend from Algeria, Djeno from the Republic of the Congo, Zafiro from Equatorial Guinea, Rabi Light from Gabon, Iran Heavy, Basrah Medium from Iraq, Kuwait Export, Es Sider from Libya, Bonny Light from Nigeria, Arab Light from Saudi Arabia, Murban from the United Arab Emirates and Merey from Venezuela. The composition is amended when the roster moves: Rabi Light entered in July 2016, Zafiro in June 2017 and Djeno in June 2018, and Basrah Medium replaced Basrah Light in January 2022.

The grades are not one substance. Saharan Blend is light and low in sulphur, Merey is dense and sour, and a refinery built for one of them cannot simply be fed the other. Every member also reaches tidewater, which the test in Article 7 quietly requires: it is written on exports rather than on reserves, and a cargo that cannot be loaded onto a tanker is not an export.

What the embargo of 1973 was

The embargo of October 1973 is regularly filed under this group and belongs to a different one. On 16 October 1973 six Gulf producers met at Kuwait City and raised their posted prices. On 17 October the ministers of the Organization of Arab Petroleum Exporting Countries, established by an agreement signed at Beirut on 9 January 1968 by Kuwait, Libya and Saudi Arabia and seated in Kuwait, agreed production cuts and an embargo on states that had supported Israel during the war of that month.

The two organisations share members and do not coincide. OAPEC is Arab by its own founding agreement, which puts Iran, Nigeria and Venezuela outside it, and its membership has included producers that were never in OPEC at all.

Leaving, and coming back

The register runs in both directions and the Secretariat publishes it. Qatar joined in 1961 and terminated its membership on 1 January 2019. Indonesia joined in 1962, suspended in January 2009, reactivated in January 2016 and suspended again at the 171st Conference on 30 November 2016, by which point it was buying more crude than it sold. Ecuador joined in 1973, suspended in December 1992, returned in October 2007 and withdrew with effect from 1 January 2020. Gabon joined in 1975, terminated in January 1995 and rejoined in July 2016.

The test that admits is the test that lapses. An exporter that stops being a net exporter has lost the qualification Article 7 asks for, and the departures line up with that more often than with any argument at the table. The roster on this page is assembled from the member records underneath it; the list the Secretariat publishes is the one that governs, and where the two disagree the Secretariat's is the later.

What the agreement does not cover

There is no common currency here, no tariff schedule, no court and no travel arrangement. The obligation runs to petroleum policy and stops. Trade between members is conducted on whatever terms apply anywhere else, and the World Trade Organization is absent from the records of Iran, Iraq, Libya and Equatorial Guinea.

Nor does any other grouping contain the whole roster. The Arab League holds the Arabic-speaking members, the African Union the African ones, and the Organisation of Islamic Cooperation covers members on two continents and none in the Americas. The countries below sit on three continents, and this agreement is the only one all of them have signed together.

The fund, and who it lends to

Finance ministers of the member states agreed the OPEC Special Fund at Paris on 28 January 1976, and the agreement establishing the OPEC Fund for International Development was signed on 27 May 1980, giving it a legal personality of its own and a seat in Vienna. It lends outside the membership rather than inside it.

OPEC+ is a different list

The Declaration of Cooperation, agreed at Vienna on 10 December 2016 after the Algiers Accord of that autumn, brought producers from outside the organisation into a shared framework of output arrangements, and the Charter of Cooperation signed on 2 July 2019 put that framework on a standing footing. Neither instrument creates membership. A country described in press coverage as part of OPEC+ holds no vote in the Conference, sends no governor to the board, contributes no grade to the basket and appears nowhere on the roster below. Article 7 is the only door.