OPEC stands for the Organization of the Petroleum Exporting Countries. It is an intergovernmental organisation of oil-exporting countries that coordinates petroleum policies among its members. Its main purpose is to stabilise oil markets, secure regular supply of petroleum to consumers, ensure stable income for producers, and influence global crude oil prices through production coordination.
Background
OPEC was founded in 1960 at the Baghdad Conference by five countries:
- Iran
- Iraq
- Kuwait
- Saudi Arabia
- Venezuela
Its headquarters is in Vienna, Austria.
OPEC emerged because oil-producing countries wanted greater control over their petroleum resources, which were earlier dominated by Western oil companies.
Current Members
OPEC currently has 12 member countries, according to OPEC’s official member-country page. These include major oil producers from West Asia, Africa and South America.
Current members listed by OPEC include:
- Algeria
- Congo
- Equatorial Guinea
- Gabon
- Iran
- Iraq
- Kuwait
- Libya
- Nigeria
- Saudi Arabia
- United Arab Emirates
- Venezuela
OPEC+
OPEC+ is a wider grouping that includes OPEC members and non-OPEC oil-producing countries such as Russia.
OPEC+ became especially important after 2016, when OPEC started coordinating with non-OPEC producers to manage global oil supply.
OPEC+ decisions have major influence on global oil prices because the grouping controls a large share of global crude supply.
Main Functions
- coordinate petroleum policies of member countries
- decide production targets or output cuts
- stabilise global crude oil prices
- protect producer-country revenues
- ensure regular oil supply to consuming countries
- respond to global demand shocks and geopolitical disruptions
- publish oil-market analysis through the Monthly Oil Market Report
Latest Oil-Market Context
OPEC’s latest Monthly Oil Market Report for May 2026 revised down global oil-demand growth for 2026. Reuters reported that OPEC cut its 2026 demand-growth forecast to 1.17 million barrels per day, compared with an earlier forecast of 1.38 million barrels per day.
OPEC production also came under pressure in April 2026. A Reuters survey reported that OPEC crude production fell by 830,000 barrels per day month-on-month to 20.04 million barrels per day, mainly due to disruption around the Strait of Hormuz amid the Iran conflict.
OPEC+ also agreed to raise June 2026 output quotas by 188,000 barrels per day, but Reuters noted that many members were unable to meet targets due to Hormuz-related disruptions.
Importance for Global Economy
OPEC matters because crude oil remains central to the world economy. Oil prices affect:
- inflation
- transport cost
- fertiliser prices
- current account balance
- exchange rates
- industrial production
- household fuel costs
- global financial markets
When OPEC or OPEC+ cuts production, oil prices may rise. When they increase supply, prices may soften, depending on demand and geopolitical conditions.
Importance for India
OPEC is highly relevant for India because India is one of the world’s largest crude oil importers.
For India, OPEC decisions affect:
- crude oil import bill
- petrol and diesel prices
- inflation
- current account deficit
- rupee stability
- fertiliser and transport costs
- fiscal burden through fuel taxes and subsidies
- energy security
A rise in crude oil prices can widen India’s current account deficit and increase imported inflation. This is why India closely watches OPEC+ production decisions.
OPEC and Energy Security
OPEC countries are major suppliers of crude oil to energy-importing countries. For India, West Asian OPEC producers such as Saudi Arabia, Iraq, Kuwait and UAE are especially important.
However, excessive dependence on imported crude creates vulnerability. Geopolitical tensions in West Asia, especially around the Strait of Hormuz, can disrupt oil supply and raise prices sharply.
The 2026 Hormuz disruption again showed why India needs diversified energy sources, strategic petroleum reserves and faster transition towards renewables, biofuels, electric mobility and green hydrogen.
Criticism
OPEC has often been criticised for influencing prices through production control.
Major criticisms include:
- it can artificially restrict supply to raise prices
- its decisions can worsen inflation in importing countries
- benefits are uneven among member countries
- some members do not follow production quotas strictly
- it slows the shift away from fossil fuels
- it gives oil exporters major geopolitical leverage
However, OPEC argues that its role is to maintain market stability and prevent extreme volatility.
Challenges Before OPEC
OPEC faces several long-term challenges:
- rising renewable energy adoption
- electric vehicle growth
- climate-change policies
- demand uncertainty
- internal differences among members
- competition from non-OPEC producers
- US shale oil production
- geopolitical instability in member countries
- pressure to balance revenue needs with market stability
As the world moves towards energy transition, OPEC’s influence may change, but it remains significant in the medium term.
Conclusion
OPEC is a major global energy organisation that coordinates oil policies among petroleum-exporting countries. Along with OPEC+, it continues to influence crude oil supply and global prices.
For India, OPEC is important because oil prices directly affect inflation, CAD, fiscal policy and energy security. The latest 2026 developments, including lower demand-growth forecasts and production disruptions linked to the Strait of Hormuz, show that OPEC remains central to global economic stability and India’s external-sector management.
