Between the ambition of sovereignty and quota restrictions… clashes within OPEC and OPEC Plus | economy

Written by the editors

Throughout the life of the Organization of the Petroleum Exporting Countries (OPEC), which extended to about 66 years, the bloc witnessed many disputes, mainly related to production quotas and compliance with the organization’s plans. These disputes appeared in 1965 when OPEC tried to influence prices by setting a ceiling for increasing production and quotas for countries, but the members did not adhere to that. In 1968, the organization concluded an agreement with Western companies regarding the selling price, then came an agreement in 1971 with oil companies to raise Prices, and setting a price program for six years.

In 1973, with the October War, Arab producing members reduced production and exports and raised prices. Arab countries also imposed an oil embargo on countries supportive of Israel, led by the United States.

Conflicts between OPEC member states entered the core of the organization’s history. The Iranian Revolution (1979) and then the Iran-Iraq War (between 1980 and 1988) affected the exports of one of the founding members of the organization, then the production of two founding members of OPEC. Iraq’s invasion of Kuwait in 1990 resulted in international sanctions, disrupting the production of the two countries, and Iraq temporarily leaving the production ceiling.

OPEC Plus

Disagreements arose with non-OPEC oil-producing countries. In the 1980s, pressure on the organization escalated with the rise in North Sea production and the decline of OPEC’s share of global production. Then the pressure returned in the years 2014-2016 with the rise in US oil production and the decline in prices. In 2016, OPEC and non-OPEC producing countries signed the “Declaration of Cooperation,” a framework that became known in practice as the OPEC Plus alliance.

In March and April 2020, OPEC Plus witnessed a dispute between Saudi Arabia and Russia regarding production cuts during the decline in demand due to the Corona virus pandemic, and a study published in “Energy Economics” describes the mentioned period as a Saudi-Russian price war during the pandemic.

On April 12, 2020, OPEC Plus announced, following its extraordinary meeting, a total reduction of 9.7 million barrels per day, starting from May 1, 2020 for two months, then 7.7 million barrels per day until the end of 2020, then 5.8 million barrels per day until April 30, 2022.

The OPEC Plus agreement was temporarily halted in July 2021 due to a dispute between Saudi Arabia and the UAE over the baselines against which the agreed-upon cuts are measured. The US Energy Information Administration stated that the OPEC Plus negotiations faltered due to a Saudi-Emirati dispute over the baseline levels, and that the subsequent agreement raised the baselines for Saudi Arabia, Russia, the UAE, Iraq, and Kuwait by a total of 1.6 million barrels per day as of May 2022.

Baselines or base levels are the backbone of the production agreements in the OPEC and OPEC+ alliances, and in short, they are the “zero point” against which the amount of increase or decrease in each member country’s production is measured. The baseline is the reference level of production (a fixed number of barrels of oil per day) agreed upon for each country. When OPEC decides to reduce production by 5%, this percentage is deducted from the baseline and not from the current production of the member country.

OPEC Plus decided on July 18, 2021, to increase production by 400,000 barrels per day per month, starting in August 2021, while adjusting the baselines starting from May 1, 2022.

Countries withdrew

The following are countries that were members of OPEC and left it:

• IndonesiaShe has been a member since 1962 and suspended her membership in 2009 and 2016.
• Gabon: She joined in 1975, ended her membership in 1995, and returned again in 2016.
• Ecuador: It joined in 1973, suspended its membership in 1992, and withdrew in early 2020.
• Qatar: She joined in 1961 and left in 2019.
• Angola: She joined in 2007 and left in 2024.
• The UAE: She joined in 1967 and left in 2026.