Editing OPEC (section)

==Organization and structure==
In a series of steps in the 1960s and 1970s, OPEC restructured the global system of oil production in favor of oil-producing states and away from an oligopoly of dominant Anglo-American oil firms (the Seven Sisters). Coordination among oil-producing states within OPEC made it easier for them to nationalize oil production and structure oil prices in their favor without incurring punishment by Western governments and firms. Prior to the creation of OPEC, individual oil-producing states were punished for taking steps to alter the governing arrangements of oil production within their borders. States were coerced militarily (e.g. in 1953, the US-UK-sponsored a [[1953 Iranian coup d'état|coup against Mohammad Mosaddegh]] after he nationalized Iran's oil production) or economically (e.g. the Seven Sisters slowed down oil production in one non-compliant state and ramped up oil production elsewhere) when acted contrary to the interests of the Seven Sisters and their governments.{{sfn|Colgan|2021|loc=The Rise of OPEC, pp. 59–93}}

The organisational logic that underpins OPEC is that it is in the collective interest of its members to limit the world oil supply in order to reap higher prices.<ref name=":1" /> However, the main problem within OPEC is that it is individually rational for members to cheat on commitments and produce as much oil as possible.<ref name=":1" />

Political scientist Jeff Colgan has argued that OPEC has since the 1980s largely failed to achieve its goals (limits on world oil supply, stabilized prices, and raising of long-term average revenues).<ref name=":1" /> He finds that members have cheated on 96% of their commitments.<ref name=":1" /> The analysis spans over the period 1982–2009.{{sfn|Colgan|2021|pp=107–109}} To the extent that when member states comply with their commitments, it is because the commitments reflect what they would do even if OPEC did not exist. One large reason for the frequent cheating is that OPEC does not punish members for non-compliance with commitments.<ref name=":1" />

In June 2020, all countries participating in the OPEC+ framework collectively agreed to the introduction of a Compensation Mechanism aimed at ensuring full conformity with and adherence to the agreed-upon oil production cuts. This initiative aligns with one of OPEC's stated objectives: to maintain a stable oil market, which, notably, has been relatively more stable than other energy commodities.<ref>{{Cite web |last=OPEC |first=Organization of the Petroleum Exporting Countries |date=15 Jul 2020 |orig-date= |title=JMMC sees improving market conditions and conformity levels |url=https://www.opec.org/opec_web/en/press_room/6060.htm |access-date=4 April 2024 |website=www.opec.org}}</ref><ref>{{Cite web |last=El Gamal |first=Rania |date=July 15, 2020 |editor-last=Edmund |editor-first=Blair |title=OPEC+ panel agrees on easing oil cuts, compensation plan, says OPEC+ source |url=https://www.reuters.com/article/oil-opec-talks-idINS8N28P02L/ |access-date=4 April 2024 |website=www.reuters.com}}</ref>

=== Leadership and decision-making ===
{{See also|List of secretaries general of OPEC}}
[[File:158ava Reunión de países miembros de la OPEP (5251965558).jpg|thumb|alt=refer to caption|OPEC Conference delegates at [[Swissotel]], [[Quito]], [[Ecuador]], December 2010]]
The OPEC Conference is the supreme authority of the organisation, and consists of delegations normally headed by the oil ministers of member countries. The chief executive of the organisation is the [[List of Secretaries General of OPEC|OPEC secretary general]]. The conference ordinarily meets at the Vienna headquarters, at least twice a year and in additional extraordinary sessions when necessary. It generally operates on the principles of unanimity and "one member, one vote", with each country paying an equal membership fee into the annual budget.<ref name="statute">{{cite web |year=2012 |title=Statute |url=http://www.opec.org/opec_web/static_files_project/media/downloads/publications/OPEC_Statute.pdf |url-status=live |archive-url=https://web.archive.org/web/20141021084736/http://www.opec.org/opec_web/static_files_project/media/downloads/publications/OPEC_Statute.pdf |archive-date=21 October 2014 |access-date=12 December 2014 |work=OPEC}}</ref> However, since Saudi Arabia is by far the largest and most-profitable oil exporter in the world, with enough capacity to function as the traditional [[swing producer]] to balance the global market, it serves as "OPEC's ''de facto'' leader".<ref name="FT2015" />

=== International cartel ===
At various times, OPEC members have displayed apparent anti-competitive [[cartel]] behavior through the organisation's agreements about oil production and price levels.<ref>{{cite journal |last=Gülen |first=S. Gürcan |year=1996 |title=Is OPEC a Cartel? Evidence from Cointegration and Causality Tests |url=http://fmwww.bc.edu/EC-P/WP318.pdf |url-status=unfit |journal=[[The Energy Journal]]|volume=17 |issue=2 |pages=43–57 |citeseerx=10.1.1.133.9886 |doi=10.5547/issn0195-6574-ej-vol17-no2-3 |archive-url=https://web.archive.org/web/20000916172154/http://fmwww.bc.edu/EC-P/WP318.pdf |archive-date=16 September 2000}}</ref> Economists often cite OPEC as a textbook example of a cartel that cooperates to reduce market competition, as in this definition from [[OECD]]'s ''Glossary of Industrial Organisation Economics and Competition Law'':<ref name=cartel>{{cite web |url= http://www.oecd.org/regreform/sectors/2376087.pdf |title= Glossary of Industrial Organization Economics and Competition Law |publisher=[[OECD]] |year=1993 |page=19 |access-date=22 December 2015 |archive-url= https://web.archive.org/web/20160304094916/http://www.oecd.org/regreform/sectors/2376087.pdf |archive-date= 4 March 2016 |url-status=live}}</ref>

{{blockquote|International commodity agreements covering products such as coffee, sugar, tin and more recently oil (OPEC: Organisation of Petroleum Exporting Countries) are examples of ''international cartels'' which have publicly entailed agreements between different national governments.}}While OPEC is at times cited as a textbook example of a cartel, various authoritative and academic sources provide a broader perspective on the organization's role. For instance, the [[US Energy Information Administration]]'s<ref>{{Cite web |title=U.S. Energy Information Administration (EIA) |url=https://www.eia.gov/ |access-date=8 April 2024}}</ref> glossary explains OPEC as:<ref name=":3" />
{{Blockquote|text=An intergovernmental organization whose stated objective is to 'coordinate and unify the petroleum policies of member countries'.}}
The ''Oxford Dictionary of Energy Science'' (2017)<ref>{{Citation |last=Jelley |first=Nick |title=A Dictionary of Energy Science |date=2017-01-19 |url=https://www.oxfordreference.com/display/10.1093/acref/9780191826276.001.0001/acref-9780191826276 |access-date=2024-04-08 |publisher=Oxford University Press |language=en-US |doi=10.1093/acref/9780191826276.001.0001 |isbn=978-0-19-182627-6|url-access=subscription }}</ref> defines OPEC as:<ref name=":7" />
{{Blockquote|text=An organization set up in 1960 to coordinate petroleum policies among its member countries, initially with the aim of securing a regular supply to consuming countries at a price that gave a fair return on capital investment.|source=}}
OPEC members strongly prefer to describe their organisation as a modest force for market stabilisation, rather than a powerful anti-competitive cartel. In its defense, the organisation was founded as a counterweight against the previous "[[Seven Sisters (oil companies)|Seven Sisters]]" cartel of multinational oil companies, and non-OPEC energy suppliers have maintained enough market share for a substantial degree of worldwide competition.<ref>{{cite journal |date=June–July 2012 |title=The Global Energy Scene |url=http://www.opec.org/opec_web/static_files_project/media/downloads/publications/OB06_072012.pdf |url-status=live |journal=OPEC Bulletin |volume=43 |pages=24–41 |archive-url=https://web.archive.org/web/20160909221208/http://www.opec.org/opec_web/static_files_project/media/downloads/publications/OB06_072012.pdf |archive-date=9 September 2016 |access-date=9 April 2016 |number=5}}</ref> Moreover, because of an economic "[[prisoner's dilemma]]" that encourages each member nation individually to discount its price and exceed its production quota,<ref>{{cite book |last1=Browning |first1=Edgar K. |url=http://www.wiley.com/college/browning/0471389161/pdf/ |title=Microeconomics: Theory & Applications |last2=Zupan |first2=Mark A. |date=2004 |publisher=Wiley |isbn=978-0-471-67871-7 |edition=8th |pages=394–396 |chapter=The Prisoner's Dilemma and Cheating by Cartel Members |access-date=5 September 2016 |chapter-url=http://www.wiley.com/college/browning/0471389161/pdf/ch14 |archive-url=https://web.archive.org/web/20160915032256/http://www.wiley.com/college/browning/0471389161/pdf/ |archive-date=15 September 2016 |url-status=live}}</ref> widespread cheating within OPEC often erodes its ability to influence global oil prices through [[Collective action problem|collective action]].<ref>{{cite news |last=Colgan |first=Jeff |date=16 June 2014 |title=OPEC, the Phantom Menace |newspaper=[[The Washington Post]]|url=https://www.washingtonpost.com/news/monkey-cage/wp/2014/06/16/opec-the-phantom-menace/ |url-status=live |access-date=9 November 2016 |archive-url=https://web.archive.org/web/20161110043953/https://www.washingtonpost.com/news/monkey-cage/wp/2014/06/16/opec-the-phantom-menace/ |archive-date=10 November 2016}}</ref><ref>{{cite journal |last=Van de Graaf |first=Thijs |year=2016 |title=Is OPEC dead? Oil exporters, the Paris agreement and the transition to a post-carbon world |url=https://biblio.ugent.be/publication/8137111/file/8137112.pdf |url-status=live |journal=Energy Research & Social Science |volume=23 |pages=182–188 |doi=10.1016/j.erss.2016.10.005 |archive-url=https://web.archive.org/web/20190925074356/https://biblio.ugent.be/publication/8137111/file/8137112.pdf |archive-date=25 September 2019 |access-date=25 September 2019 |hdl-access=free |hdl=1854/LU-8137111}}</ref> Political scientist Jeff Colgan has challenged that OPEC is a cartel, pointing to endemic cheating in the organization: "A cartel needs to set tough goals and meet them; OPEC sets easy goals and fails to meet even those."<ref name=":1" />

OPEC has not been involved in any disputes related to the competition rules of the [[World Trade Organization]], even though the objectives, actions, and principles of the two organisations diverge considerably.<ref>{{cite journal |last1=Farah |first1=Paolo Davide |last2=Cima |first2=Elena |date=September 2013 |title=Energy Trade and the WTO: Implications for Renewable Energy and the OPEC Cartel |journal=Journal of International Economic Law |volume=16 |issue=3 |pages=707–740 |doi=10.1093/jiel/jgt024 |ssrn=2330416}}</ref> A key US District Court decision held that OPEC consultations are protected as "governmental" acts of state by the [[Foreign Sovereign Immunities Act]], and are therefore beyond the legal reach of US [[competition law]] governing "commercial" acts.<ref>{{Cite journal |last1=Joelson |first1=Mark R. |last2=Griffin |first2=Joseph P. |year=1975 |title=The Legal Status of Nation-State Cartels Under United States Antitrust and Public International Law |journal=The International Lawyer |volume=9 |issue=4 |pages=617–645 |jstor=40704964}}</ref> Despite popular sentiment against OPEC, legislative proposals to limit the organisation's sovereign immunity, such as the [[NOPEC]] Act, have so far been unsuccessful.<ref>{{cite news |last=Learsy |first=Raymond J. |date=10 September 2012 |title=NOPEC ('No Oil Producing and Exporting Cartels Act'): A Presidential Issue and a Test of Political Integrity |work=HuffPost |url=https://www.huffingtonpost.com/raymond-j-learsy/nopec-no-oil-producing-an_b_1869803.html |url-status=live |access-date=6 April 2016 |archive-url=https://web.archive.org/web/20170603111612/http://www.huffingtonpost.com/raymond-j-learsy/nopec-no-oil-producing-an_b_1869803.html |archive-date=3 June 2017 |quote=Varied forms of a NOPEC bill have been introduced some 16 times since 1999, only to be vehemently resisted by the oil industry.}}</ref>

===Conflicts===
OPEC often has difficulty agreeing on policy decisions because its member countries differ widely in their oil export capacities, production costs, reserves, geological features, population, economic development, budgetary situations, and political circumstances.<ref name="MEES" /><ref name="discordant" /> Indeed, over the course of market cycles, oil reserves can themselves become a source of serious conflict, instability and imbalances, in what economists call the "[[Resource curse#Effects|natural resource curse]]".<ref>{{cite journal |last=Palley |first=Thomas I. |date=December 2003 |title=Lifting the Natural Resource Curse |url=https://www.globalpolicy.org/component/content/article/198/40112.html |url-status=live |journal=[[Foreign Service Journal]] |archive-url=https://web.archive.org/web/20160520023419/https://www.globalpolicy.org/component/content/article/198/40112.html |archive-date=20 May 2016 |access-date=26 April 2016}}</ref><ref>{{cite journal |last=Ross |first=Michael L. |date=May 2015 |title=What Have We Learned about the Resource Curse? |url=https://escholarship.org/content/qt8tp5x1hb/qt8tp5x1hb.pdf?t=qay04b |journal=[[Annual Review of Political Science]] |volume=18 |pages=239–259 |doi=10.1146/annurev-polisci-052213-040359 |doi-access=free}}</ref> A further complication is that [[Religious war|religion-linked]] [[List of conflicts in the Middle East|conflicts in the Middle East]] are recurring features of the geopolitical landscape for this oil-rich region.<ref>{{cite magazine|last=Kessler|first=Oren|author-link=Oren Kessler|date=13 February 2016|title=The Middle East's Conflicts Are About Religion|magazine=[[The National Interest]]|url=http://nationalinterest.org/feature/the-middle-easts-conflicts-are-about-religion-15205?page=show|url-status=live|access-date=17 March 2016|archive-url=https://web.archive.org/web/20160326124531/http://nationalinterest.org/feature/the-middle-easts-conflicts-are-about-religion-15205?page=show|archive-date=26 March 2016}}</ref><ref>{{cite news |last=Motadel |first=David |date=24 May 2015 |title='Defending the Faith' in the Middle East |newspaper=[[The New York Times]]|url=https://www.nytimes.com/2015/05/24/opinion/sunday/defending-the-faith-in-the-middle-east.html |url-status=live |access-date=17 March 2016 |archive-url=https://web.archive.org/web/20150908005002/http://www.nytimes.com/2015/05/24/opinion/sunday/defending-the-faith-in-the-middle-east.html |archive-date=8 September 2015}}</ref> Internationally important conflicts in OPEC's history have included the [[Six-Day War]] (1967), [[Yom Kippur War]] (1973), a [[OPEC siege|hostage siege directed by Palestinian militants]] (1975), the [[Iranian Revolution]] (1979), [[Iran–Iraq War]] (1980–1988), [[Gulf War|Iraqi occupation of Kuwait]] (1990–1991), [[September 11 attacks]] (2001), [[History of Iraq (2003–2011)|American occupation of Iraq]] (2003–2011), [[Conflict in the Niger Delta]] (2004–present), [[Arab Spring]] (2010–2012), [[Libyan Crisis]] (2011–present), and international [[Embargo against Iran]] (2012–2016). Although events such as these can temporarily disrupt oil supplies and elevate prices, the frequent disputes and instabilities tend to limit OPEC's long-term cohesion and effectiveness.<ref>{{cite encyclopedia |year=2004 |title=Organisation of Petroleum Exporting Countries (OPEC) |encyclopedia=Encyclopedia of the Modern Middle East and North Africa |publisher=Gale / Macmillan Reference USA |location=Detroit |url=http://www.encyclopedia.com/topic/OPEC.aspx |access-date=10 April 2016 |editor-last=Mattar |editor-first=Philip |editor-link=Philip Mattar |edition=2nd |volume=3 |isbn=978-0-02-865769-1 |archive-url=https://web.archive.org/web/20160409042033/http://www.encyclopedia.com/topic/OPEC.aspx |archive-date=9 April 2016 |url-status=live}}</ref>