She rejected Biden's pleans to pump more oil, this is "opec plus"

She rejected Biden's pleas to pump more oil... This is the story of "OPEC Plus"

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies in the so-called "OPEC Plus" are under pressure from major consumers such as the United States and India to increase supplies in order to cool the soaring prices, which have increased by 50% this year.

OPEC and its allies "OPEC Plus" (OPEC +) rejected US pleas to producers to pump more crude than already scheduled, and agreed to stick to plans for a gradual return to production halted due to the Corona pandemic.

To which US President Joe Biden responded, Saturday, November 6, 2021, that his administration has ways to deal with high oil prices, as oil prices exceeded $80 a barrel,

The Organization of the Petroleum Exporting Countries (OPEC), Russia and other allies in the so-called "OPEC Plus" are under pressure from major consumers such as the United States and India to increase supplies in order to calm rising prices, which have increased by 50 percent this year.

So what is the story of “OPEC” and “OPEC Plus”, which is responsible for directing the global market for oil, which is an influential commodity in the lives of producers and consumers alike, and observers expect demand for it to continue significantly until at least 2050?

OPEC

"OPEC" is an abbreviation for "Organization of Petroleum Exporting Countries", and it currently includes 13 countries that depend heavily on their oil exports to achieve their income. OPEC member countries aim to increase revenues from selling oil on the global market.

Founded Date: 1960.

Place of establishment: Baghdad.

Founding countries: Saudi Arabia, Iran, Iraq, Kuwait and Venezuela.

Organization headquarters: Vienna.

The current number: 13 countries, including 5 founders, in addition to Algeria, Angola, Gabon, Libya, Nigeria, the United Arab Emirates, Equatorial Guinea, and the Democratic Republic of the Congo.

The backbone of the organization: Saudi Arabia.

Countries withdrew: Qatar (1970-2019) and Ecuador (1973-2020).

Countries that have suspended their membership: Indonesia (1962 - 2008 - 2016).

Membership application: In October 2015, Sudan formally applied for membership, but it has not yet become a member.

Membership Requirement: Requires approval of 3/4 of the organization's current members, including all five founders.

"Observer" countries: Since the 1980s, representatives from Egypt, Mexico, Norway, Oman, Russia, and other oil-exporting countries have attended many OPEC meetings as observers to coordinate policy.

Official language: English.

Average daily production: about 25 million barrels, according to December 2020 statistics, out of a total global production estimated at 95 million barrels per day.

The percentage of the organization's production out of the world production: about 40%.

Reserves: About 1.227 trillion barrels, or about 79% of the proven crude oil reserves in the world, estimated at the end of 2019 at 1.55 trillion barrels.

Stated tasks: Coordinating and unifying the oil policies of member countries and ensuring the stability of oil markets, in order to secure an efficient supply, a regular economy of oil for customers, a stable income for producers, and a fair return on the capital of investors in the oil industry.

Regular OPEC meetings: They are held twice a year.

Venue: The organization's headquarters is in Vienna.

Quorum: At least two-thirds of the members are present. Other observer countries may attend meetings, but they do not have the right to vote.

Decisions: unanimously by the 13 member states.

The objective of the meeting: Determining the oil production quotas for each of the member states.

Extraordinary meetings: held outside the semi-annual schedule to discuss urgent matters.

Effectiveness of decisions: 30 days after they are taken (except if another date is agreed upon, or a veto is used by a member before the decision is implemented).

Publishing oil market reports: monthly and annual, as well as an annual World Oil Outlook report, which assesses the long-term outlook for oil.

Oil prices: If we assume a constant rate of demand, prices will rise if OPEC reduces production quotas and vice versa, with exceptions due to global crises.

OPEC Plus (OPEC +)

It is a grouping of 13 OPEC members with 10 other oil-exporting countries, namely Russia, Azerbaijan, Bahrain, Brunei, Malaysia, as well as Kazakhstan, Mexico, Oman, Sudan and South Sudan.

The backbone of the organization: Saudi Arabia and Russia.

Objective: Reducing oil production to improve oil prices in the market.

Announcement date: November 30, 2016.

Venue: Vienna, the Austrian capital.

Reduction rate: about 1.2 million barrels per day.

The share of Saudi Arabia (the largest oil producer) from the reduction: 500,000 barrels per day.

Russia's share of the cut: 230 thousand barrels per day.

Effective date of the agreement: Until March 2020.

March 5, 2020 meeting: With the exception of Russia, 22 countries (OPEC Plus) agreed to Saudi Arabia’s proposal to increase production cuts, which led to the failure of the meeting.

Black Monday meeting

The meeting of March 9, 2020, or what is known as “Black Monday”: negative repercussions on global stock prices and an oil price war between Saudi Arabia and Russia that caused major collapses in oil prices.

– April 9, 2020 meeting: the inclusion of OPEC Plus countries and other oil-exporting countries, with the aim of reaching a fair agreement to restore balance to the oil markets.

Meeting place: virtual via video conferencing. The agreement has not been completed.

- April 12, 2020: The agreement is completed after the United States guarantees Mexico's share (300,000 barrels) that it objected to reducing it.

April 2020: The price of a barrel listed on the New York market fell below zero for the first time in history.

– Early May 2020: The start of the implementation of the agreement between the countries of the “OPEC Plus” alliance to reduce production by 9.7 million barrels per day for two months (May and June), then reduce production cuts to 8 million barrels per day from July until The end of 2020, and then to 6 million barrels, starting from the beginning of 2021 until April 2022.

Exceptions: 3 member countries of the “OPEC Plus” alliance were excluded from the reduction due to the economic and political difficulties they are witnessing, namely Venezuela and Iran, which are subject to US economic sanctions, as well as Libya, which witnessed a long-term conflict.

Preferential treatment: Allowing Russia and Kazakhstan, at the beginning of 2022, to increase their production margin to meet their domestic consumption.

Countries exempt from the cut: Mexico, but it cannot increase production at will.

Non-OPEC Plus countries: They are free to decide the level of their production, such as the United States, the largest producer of crude in the world, and Brazil and Norway as well.

The first, second, and fifth meetings of July 2021: failed due to Saudi-Emirati differences, while Saudi Arabia and Russia support extending the agreement as it is until December 2022, the Emirates refused, demanding to discuss an increase in production levels before agreeing to the extension beyond April / April 2022.

September 1, 2021: “OPEC Plus” agreed to continue increasing supplies by about 400,000 barrels per day during the month of October 2021, despite the continued US pressure to increase production more quickly.

October 4, 2021: The “OPEC Plus” alliance said that it will abide by the existing agreement on the gradual increase in oil production by an additional 400,000 barrels per day to the market every month until at least April 2022, to gradually get rid of cuts of 5.8 million barrels per day, pushing crude prices to their highest levels in 3 years ($81 a barrel).

October 31, 2021: US President Joe Biden, on the sidelines of the Group of Twenty summit in Rome, expressed his regret that "the refusal of Russia, Saudi Arabia and other major producers to pump more oil (...) is not fair", directly targeting the alliance. OPEC Plus".

November 4, 2021: OPEC Plus agreed at a meeting to maintain a gradual increase in production by 400,000 barrels per day until the end of next December.

Oil prices historically ups and downs

1930: The discovery of oil in East Texas was one of the most prominent points in that period because it helped create an oil glut that coincided with the Great Depression, which accordingly caused prices to drop from $1.19 in 1930 to $0.65 in 1931.

1973: Following the repercussions of the October 6, 1973 war between Egypt and Israel, the price of a barrel rose from about $3.6 to $12 a barrel in 1974, and fluctuated between $12.5 and 14 a barrel, during the period 1974-1978, with OPEC producing about 30 million dollars. barrels per day.

1979: The Islamic Revolution in Iran caused the continuation of the upward trend in prices at $25 a barrel.

Summer of 1980: a war erupted between Iraq and Iran that lasted for 8 years, and again caused price increases, reaching a high of $35 a barrel in 1981.

During the period from 1982 to 1985: oil prices fell dramatically due to the mismanagement of supply in OPEC, and the greed of its members, as prices fell to 31 dollars a barrel in 1982, and continued to decline to 29 dollars in 1983, 28 dollars in 1984, and 26 dollars In 1985, prices reached their lowest level at the end of 1986 at $10 a barrel.

August 2, 1990: The Iraqi invasion of Kuwait led to a rise in prices to $23 a barrel.

- 1997: The Asian financial crisis led the markets to a slump, and the Brent price fell to a trough at less than 10 dollars, - with the beginning of the 21st century, prices returned to settle at about 27 dollars a barrel, after the invasion of Iraq and the financial crisis.

2003: The period following the invasion of Iraq witnessed an unprecedented increase in demand led by emerging economies, led by China and India, which led to an increase in prices that reached a historical level of $147 in the summer of 2008.

- End of 2008: With the onset of the global financial crisis, prices fell to less than 40 dollars, which prompted the "OPEC" countries to reduce production so that crude oil prices returned to the previous threshold of 100 dollars per barrel.

July 2014: The beginning of a gradual decline in oil prices, reaching $53 a barrel, the lowest level since April 2009.

The first quarter of 2015: Prices began to rise to an average of $65 per barrel.

End of 2015: $30 per barrel.

Early 2016: $27, the lowest level in 12 years.

First half of 2016: $38 per barrel.

2017: $61 a barrel.

2019: $66 a barrel.

2020: $65 a barrel.

2020: After the failure of "OPEC Plus" to reach an agreement to deepen oil production cuts and Russia's withdrawal from the alliance, prices fluctuated between $32.5 and $37.63 per barrel.

September 27, 2021: Oil prices rose towards $80 for Brent crude, for the first time since October 23, 2018, amid increased demand for crude from European markets, which are witnessing sharp increases in natural gas prices.

The issued oil prices indicate an increase in crude consumption in many major markets in the world, and the withdrawal of their reserve stocks, amid expectations that prices will continue to rise in the last quarter of 2021.