Key Terms & Concepts — UPSC Mains
OPEC
"The Organization of the Petroleum Exporting Countries — a permanent intergovernmental organisation of 12 oil-producing nations that coordinates petroleum production policies to stabilise oil markets."
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent intergovernmental organisation founded in Baghdad, Iraq, on September 14, 1960, by five founding members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Its Secretariat is based in Vienna, Austria. OPEC currently has 12 member countries (as of 2024). OPEC's stated mission is to coordinate and unify the petroleum policies of its member countries, ensuring the stabilisation of oil markets to secure efficient, economic, and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital to investors. In practice, OPEC functions as a cartel — member nations collectively agree on production quotas that influence global oil supply and, consequently, global oil prices. Historically, OPEC has wielded enormous geopolitical power: the 1973 Arab Oil Embargo (triggered by the Yom Kippur War) caused the first global oil crisis, quadrupling prices and severely impacting oil-importing nations like India. OPEC+ (OPEC Plus): Since 2016, OPEC has partnered with 10 additional non-OPEC oil-exporting countries (most notably Russia, Kazakhstan, Mexico, and others) to form the broader OPEC+ alliance, coordinating cuts to stabilise prices against the backdrop of US shale oil's rise. OPEC+ collectively controls roughly 40% of global oil production and about 80% of proven reserves. Member countries (2024): Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, UAE, and Venezuela. (Indonesia and Qatar withdrew in 2016 and 2019 respectively; Ecuador withdrew in 2020; Angola withdrew in 2024.) India's exposure: India imports about 85% of its crude oil needs, making it the world's third-largest oil importer. OPEC+ production decisions directly affect India's import bill, current account deficit, and inflation.
UPSC GS3 Economy (energy security, oil prices, inflation, CAD) and GS2 International Relations (India's energy diplomacy, West Asia). India's oil dependency on OPEC is a recurring economic vulnerability. OPEC+ production cuts affect petrol prices and RBI's inflation management — connect to monetary policy.
- 1 Founded September 14, 1960, Baghdad; Secretariat in Vienna, Austria
- 2 Founding 5: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela
- 3 Current membership: 12 countries (as of 2024)
- 4 Function: coordinate production quotas → influence global oil supply and prices
- 5 OPEC+: formed 2016 — OPEC + 10 non-members including Russia; controls ~40% of global production
- 6 1973 Arab Oil Embargo: OPEC's most consequential action — triggered first global energy crisis
- 7 India: imports ~85% of crude oil needs; third-largest oil importer — highly exposed to OPEC decisions
- 8 OPEC's market power reduced by US shale oil boom (post-2010) but still significant
- 9 OPEC+ 2025-26: paused production hikes for Q1 2026 after releasing ~2.9 mb/d into markets since April 2025; retains cuts of ~3.24 mb/d (~3% of global demand)
- 10 Angola withdrew from OPEC in January 2024; current membership is 12 countries
When OPEC+ announced surprise production cuts of 1.16 million barrels per day in April 2023, Brent crude jumped above $85/barrel. For India, which imports ~85% of its oil, this directly raised the petroleum subsidy burden and put upward pressure on petrol/diesel retail prices — a classic UPSC linkage between international organisations and India's macroeconomic management.
