Definition
The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multinational governmental organization founded in 1968 by the first three members: Kuwait, Saudi Arabia and Libya. OAPEC’s principal objective is to coordinate energy policies among its member countries and safeguard their interests. It also helps in economic cooperation and development among these countries, specifically relating to petroleum and its derivatives.
Phonetic
OAPEC is pronounced as “O-A-P-E-C” where each letter is said individually. In the International Phonetic Alphabet (IPA), it would be: /əʊ.eɪ.pi:.i:.si:/.
Key Takeaways
<ol><li> <strong>Established in 1968</strong>: The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multilateral organization established in the year 1968 by the Kingdom of Saudi Arabia, the State of Kuwait, and the Libyan Arab Republic. Its main goal is to foster cooperation between its member countries in regards to petroleum policies. </li><li> <strong>Influence in Global Oil Market</strong>: OAPEC has significant influence in the global oil market because its member countries hold a large proportion of the world’s petroleum reserves. This influence was notably displayed during the 1973 oil embargo, which significantly impacted the global economy. </li><li> <strong>Eleven Member Countries </strong>: Currently, OAPEC has eleven member countries, including Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, Tunisia, and the United Arab Emirates. These member countries work collaboratively to coordinate and unify their petroleum policies, protect their interests, and promote technical collaboration among each other. </li></ol>
Importance
The Organization of Arab Petroleum Exporting Countries (OAPEC) plays a significant role in the global economy due to its control over a significant portion of the world’s oil reserves. Established in 1968, its member countries work together to coordinate their oil policies and manage their collective petroleum exports. As such, OAPEC’s decisions can significantly impact global oil prices and, by extension, the economies of countries that are heavily dependent on oil imports. Because of the strategic importance of oil in modern economies, OAPEC has the ability to wield significant economic influence and negotiate with powerful multinational corporations and countries, thus making it an essential organization in international business and finance.
Explanation
The Organization of Arab Petroleum Exporting Countries (OAPEC) is a multi-governmental organization, founded in 1968, aimed at promoting cooperation among Arab countries in the petroleum sector. The primary objective of this organization is to safeguard its members’ interests by ensuring the stabilization, sustainability, and efficient management of oil resources pertaining to these nations. This focus is designed to contribute to the development and strengthening of international oil markets, whilst simultaneously providing a platform for members to discuss oil politics and related economic issues, enhancing mutual understanding by fostering an environment conducive for the exchange of views and coordination.Moreover, OAPEC operates to protect the oil-rich Arab nations’ rights over their natural resources and maintains fair prices in international oil markets. The organization accomplishes this by coordinating oil policies and working towards maintaining international oil supply and demand equilibrium. It is crucial to note that while OAPEC primarily concentrates on oil policies, it also encourages cooperation, collaboration, and sharing of knowledge, research, and technology among its member states in other energy sectors. Ultimately, OAPEC’s fundamental role is to create an Arab integrated energy sector that would serve the economic growth of its member countries and contribute to the global energy market’s stability.
Examples
1. The 1973 Oil Embargo: Perhaps one of the most significant real world examples in which OAPEC came to spotlight was during the Arab-Israeli War in 1973. In response to America’s support to Israel, OAPEC implemented an oil embargo against Western countries, causing a significant energy crisis, soaring oil prices, and demonstrating the political power that oil-rich Arab nations held in global affairs.2. The Qatar Withdrawal: In recent years, Qatar decided to withdraw from OAPEC in order to focus more on its natural gas production, which is a major part of Qatar’s revenue. This situation indicated a shifting in the energy markets and changing interests within the member countries.3. Arab Gas Pipeline Project: This is a regional gas project directly involving several OAPEC members (Egypt, Jordan, Syria and Lebanon). It demonstrates the collaboration between OAPEC countries in optimizing the utilization of Arab gas resources in serving development objectives. This project also highlights the role that OAPEC plays in economic cooperation and joint Arab action in the petroleum industry, besides its role in coordinating petroleum policies.
Frequently Asked Questions(FAQ)
What is the Organization of Arab Petroleum Exporting Countries (OAPEC)?
OAPEC is a multi-governmental organization that was established in 1968 by the first three members: Kuwait, Saudi Arabia, and Libya. The organization’s goal is to cooperate on petroleum policies and promote collaboration among member states.
Who are the member countries of OAPEC?
As of now, OAPEC has eleven members which are: Algeria, Bahrain, Egypt, Iraq, Kuwait, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and the Republic of Yemen.
What are the primary roles and objectives of OAPEC?
OAPEC’s main aims are to foster the cooperation among member states regarding petroleum matters, provide means for the continuous review of these matters, and establish a collective stance on issues related to petroleum and its industry.
How does OAPEC differ from OPEC?
While both OAPEC and OPEC consist of oil-producing countries, their memberships and objectives differ. OPEC’s membership is not limited to Arab countries and its primary objective is to coordinate and unify petroleum policies to maintain fair and stable prices. Meanwhile, OAPEC consists strictly of Arab petroleum-exporting countries and focuses on fostering cooperation on petroleum-related matters among its members.
Where is OAPEC’s headquarters located?
The headquarters of OAPEC is located in Kuwait.
Does OAPEC regulate the price of oil?
No, OAPEC is not responsible for setting oil prices. Its main goals lie in promoting cooperation and information sharing between members regarding the oil industry.
How does a country become a member of OAPEC?
Membership in OAPEC requires a country to be an Arab country that exports petroleum. The existing members cast a vote on whether to admit the new member.
Does OAPEC have any influence on global oil production and prices?
While OAPEC does not directly control global oil prices or production, the decisions and policies of its member nations, who are important global oil producers, can indeed have effects on the global oil market.
What are some actions that OAPEC has taken historically?
One significant action in OAPEC’s history is the 1973 oil embargo which protest against countries seen as supporting Israel during the Yom Kippur War. The embargo had a major impact on global oil prices and caused a serious energy crisis in the affected countries.
Related Finance Terms
- Arab Oil Embargo
- Petroleum Exporting
- OPEC (Organization of the Petroleum Exporting Countries)
- International Energy Policy
- Oil Reserves
Sources for More Information
