Impact of Opec

Several oil-countries have been facing economic and political turbulence as a result of the crash in oil prices, and there is disagreement among OPEC as how to handle the situation. (Krauss) While this is happening, America’s oil production continues to rise, as it inches closer to becoming an energy superpower in production and consumption; and countries that depend on their oil exports face recession.

More often, higher oil prices falter the overall global economy. While exporting countries may enjoy the returns on transactions, importing countries, especially the net importers, largely suffer the consequences of high petroleum prices thereupon slowing down the deelopment of the global economy. The impact of high oil prices on importers and the entire world economy cannot be underrated as they adversely affect the growth of the importing economies in various ways. For one, with a rise in oil prices, commodity cost also rises signalling bad times for the recipient economies (Yépez-Garcia and Dana 90). Commodities such as food are dependent on oil for transport and shipment

In 1973, OPEC placed an embargo on oil shipments to the U.S. The price of oil almost instantly quadrupled, and a new era of energy awareness started.

When trading oil it pays to keep an eye on the major consuming nations, as any increase or decrease in usage is sure to have an impact on the commodities performance. Something that is also worth monitoring – with this tying into the performance of major consuming nations – is OPEC, the Organisation of the Petroleum Exporting Countries. This international organisation works to ensure both the stablisaiton of the oil markets, along with coordinate and unify petroleum policies. Current members of OPEC include mass-producing oil nations (13 in total, including Saudi Arabia, UAE, Iran, Iraq, and Qatar). Considering that OPEC has the power to decide policies related to the production and sale of petroleum oil, it certainly has the power to impact the price, flow, and distribution of oil worldwide.

Unlike the 1970s, when the U.S. was held at bay by OPEC withholding oil production for political reasons, the growth of

Our world economy depends upon petroleum; petroleum, in fact, has shaped the modern world. It has dictated production technologies and methods. It has facilitated the emergence of a worldwide transportation network. It has allowed cites to grow and expand, and determined the spatial landscape of regions. Due to our great need for petroleum, the scope of OPEC¡¦s power surpasses our prowess as an economic superpower, considering OPEC regulates the output and the price of oil from their reserves.

The OPEC nations showed the world that their huge crude reserves could be wielded as a political and

According to current estimates, more than 80% of the world's proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to around 66% of the OPEC total (OPEC Share of World Crude Oil Reserves, 2014). Competition amongst the U.S. and the Middle East has never reached this level before. There is a constant tension between the two countries and refuse to collaborate in dividing the market share equally. Furthermore, as both nations refuse any bipartisan agreement, there is no limiting the production of oil. Each nation is looking to drive out competition by any means. What they don’t realize is if they cooperated and reached an agreement amongst the international community, oil will remain profitable just as it was a few years ago. Though, this is unlikely to happen any time soon, but will eventually cause Saudi Arabia and other Middle Eastern countries to take a drastic decision when their main source of capital plummets due to the current price of oil. Profits are no longer seen in the oil industry. The Price of oil has been selling at around $50-$60 per barrel, not enough to cover production cost. The United States is able to withstand any contraction within the oil sector, as their financial portfolio is diversified, not solely reliant on the price of

The Organization of the Petroleum Exporting Countries (OPEC) was formed in 1960 to unify the policies of oil exporting countries in the Middle East (About Us). During the 1973 Arab-Israeli War, the United States and Netherlands helped Israel in this war with supplies. This angered OPEC countries and acted as a catalyst for the 1973 oil embargo (Reid). Many countries in OPEC and most notably Saudi Arabia, wanted Israel to retreat from territories they gained during the war (Reid). The embargo that resulted caught many Western countries flat footed and sparked a global recession.

In 1973, Arab states and Israel were in the midst of war. In retaliation of the U.S. resupplying Israeli military, Arab members of the Organization of Petroleum Exporting Countries (OPEC) initiated an embargo against the United States and other countries that supported Israel. This embargo banned petroleum exports to certain countries, introduced cuts in oil production, and had a drastic effect on the U.S. economy (Oil Embargo, 1973–1974). It led to quadrupling oil prices and oil shortages that led to a widespread crisis across the United States and other countries facing the embargo. The crisis caused a global realization that the world seemed to be running out of oil and provided incentive to look to alternative energy

Oil-The article”OPEC #1”explains the oil prices.The Oil of the Middle East is the price of oil has fallen by nearly half in just six months.Anyone who buys oil or gas is happy because the prices are low.Car and truck drivers, airlines, and shipping companies are all happy because they don't have to spend as much money on gas. Oil companies are not very happy. They are losing money.A barrel of oil now costs $58 and last summer it was $107.Oil prices have gone down and people are happy,at least some of

Oil is a limited commodity with an unlimited demand. Very few nations have the luxury of having their own supply to which they can fulfill their own needs, while other countries clamour for what they can get . The countries with oil realized instead of competing with one another on exports , it would be much more profitable to simply work together and cooperate in their production of oil, rather than compete. In doing this, these countries will then be able to influence the market magnitudes more.

Food prices and the prices of other materials will also increase as a result of peak oil, which is another economic impact. This is because all countries rely on imports of food or other materials. For example, more than 80% of the imports to America are goods and industrial equipment ($2.268 trillion) and the smallest import category is food ($115 billion). These rates will be affected due to peak oil because most of these imports are either shipped, or are received by transportation, which runs on oil as a fuel. When peak oil is reached, ships and other methods of transportation would not have enough fuel to run on which therefore results in countries not receiving materials they need. This issue greatly affects low-income countries such

In 2014 the Organization of Petroleum Exporting Countries, or OPEC decided to lower the oil price. The reason the OPEC nations decided to overproduce and flood the market was to strangle the oil industry of the United States. This low price would force the oil businesses to lower their prices to compete and therefore income would be reduced. The OPEC nations would have a majority of control over the oil market if the US oil industry fades or is driven out of business. The OPEC nations, whose primary income is from petroleum, are fighting for more income from the US based

The various ties between the Organization of Petroleum Exporting Countries and the United States of America has always ebbed and flowed. American-OPEC relations have been strained by events such as the increase in oil prices in 1973 in retaliation of the American support of Zionist terrorists that the U.S. would call “Israel”, but now, the various economies of OPEC nations themselves could be under threat.