OPEC and Petrocurrencies Overview

The Organization of the Petroleum Exporting Countries, an international organization formed in 1960 by five oil-producing developing countries: Iraq, Iran, Kuwait, Saudi Arabia and Venezuela.

Seven major oil companies that dominated the international oil market in the early 20th century: BP, Texaco, Chevron, ExxonMobil, Shell, TotalEnergies, and Eni.

A currency widely used in international trade, which central banks hold as part of their foreign reserves.

OPEC's primary objective: to coordinate and unify petroleum policies among member countries, secure fair prices for petroleum producers, supply petroleum to consuming nations efficiently, and ensure a fair return on investment in the industry.

OPEC's 'Declaratory Statement of Petroleum Policy in Member Countries' (1968) asserted the right of all countries to control their natural resources for national development.

OPEC members control a significant portion of the world's proven oil reserves, with Saudi Arabia and Venezuela holding a large share.

Despite controlling most of the world's oil reserves, OPEC's oil production only accounts for about 43% of the world's total.

OPEC held the majority of the world's proven oil reserves for a long time, with more than 81% controlled by its members in 2015.

The exclusive possession or control of the supply of or trade in a commodity or service.

A currency of an oil-producing nation whose oil exports are sufficiently significant as a percentage of total exports for the currency to fluctuate in value along with the price of oil.

Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.

Liability to change rapidly and unpredictably, especially for the worse.

A goal for the production of a good. It can be set high to encourage production or can be used to restrict production to support a certain price level.

A sudden, violent, and unlawful seizure of power from a government.

A set of actions to control a nation's overall money supply and achieve economic growth.

An official ban on trade or other commercial activity with a particular country.

OPEC's ability to influence global economies and political situations, often leading to drastic shifts in oil prices and international relations.

A significant historical event where OPEC members, mainly Arab nations, imposed an oil embargo on countries supporting Israel in the Arab-Israeli conflict, causing global economic hardship.

A situation where a country, often a major producer, manipulates the price of oil to weaken the economic standing of another country, often a rival nation, such as the case of Saudi Arabia and Iran.

Saddam Hussein's attempt to break free from the US dollar's dominance in global oil trade by transitioning to the euro, aiming to utilize a more multi-national currency.

A system where the US dollar is the primary currency used in global oil transactions, granting the US significant economic power and influence.

Libyan leader Muammar Gaddafi's opposition to the petrodollar system, arguing that it provides the US with an unfair advantage in the global economy.

International sanctions imposed on a nation by the US and other countries, typically due to concerns over nuclear weapons or other international conflicts, like the sanctions placed on Iran.

A system where oil-producing nations, often those belonging to OPEC, retain control over their natural resources, asserting their right to regulate and manage their oil production and pricing.

The "petrodollar" system refers to the practice of pricing oil in US dollars. This system, established in the 1970s, gives the US significant influence over the global oil market and the economies of oil-producing countries.

In 1953, the CIA and MI6 orchestrated a coup to overthrow Iranian Prime Minister Mohammad Mosaddegh. This coup was driven by the US and UK's desire to control Iranian oil and ensure the continued flow of cheap oil to the West.

The "petrodollar" system was seen as a way for the US to control the price of oil on the global market and influence the internal politics of oil-producing countries. This system allowed the US to use its economic dominance to secure its interests in the Middle East.

Muammar Gaddafi, the former leader of Libya, argued that the "petrodollar" system unfairly benefited the US at the expense of developing countries. He proposed creating a new, unified African currency to reduce the US's influence and promote economic independence for African nations.

Venezuela's attempt to sell oil in its own currency, the bolivar, was seen as a challenge to the "petrodollar" system. However, the US responded with sanctions that severely damaged Venezuela's economy, highlighting the power of the US in controlling the global oil market.

The "petrodollar" system has been a subject of debate, with some arguing that it gives the US undue power over the global economy while others believe it promotes stability and economic growth. Critics suggest it reinforces economic inequality and creates dependency on the US dollar.

The "petrodollar" system, while controversial, has been influential in shaping the global oil market and international relations. Its existence has led to conflicts, economic fluctuations, and ongoing debates about global economic power.

A currency based primarily on the value of a country's oil exports, which fluctuates with oil prices.

Saudi Arabia's national oil company and the world's third most valuable company, responsible for extracting oil in Saudi Arabia.

Iran holds the world's second-largest natural gas reserves and is a major oil producer, influencing global petroleum markets.

The Venezuelan economy is heavily reliant on oil, but its dependence on petrodollars has led to economic instability and hardships for the people.

The idea of replacing the U.S. dollar as the main currency for oil transactions with a unified oil currency, which was proposed by Muammar Gaddafi in the early 2000s.

A situation in which one entity controls the supply of a particular good or service, often leading to higher prices and limited choices.

A sudden and forceful seizure of power from a government, often through violence or illegal means.

The ongoing economic crises and rising energy costs have led OPEC countries considering alternative export currencies, with some nations like Kuwait opting for their own currency instead of the US dollar. This allows them to control the value of their currency and benefit their economies by keeping the money within their borders.

Saudi Arabia's consideration of accepting the Chinese yuan instead of US dollars for oil sales to China is a major development. This move, if implemented, could have significant implications for the global oil market and weaken the dominance of the US dollar.

The 2019 Abqaiq–Khurais attack on Saudi Aramco's oil facilities demonstrated the vulnerability of global oil infrastructure and the potential for significant disruption to the oil market. The attack caused a major supply shock, leading to a dramatic increase in oil prices and impacting the global economy.

Saudi Arabia, as a founding member of OPEC and the world's largest oil exporter, holds significant influence over the organization's decisions. Its ability to set production quotas and prices allows it to shape the global oil market and further its own economic interests.

Countries within OPEC like Kuwait have devised a way to reduce dependence on the US dollar by converting US dollar sales into their own national currencies. This method, similar to the gold standard in the Bretton Woods system, keeps the demand for their currency high, boosting their economies.

Saudi Arabia is considering shifting away from accepting US dollars for oil sales to China by accepting yuan instead. This move could have a major impact on the US dollar's dominance, especially since Saudi Arabia is a major oil producer. This could trigger a domino effect in the Gulf states and beyond.

OPEC's goal is to coordinate and unify the petroleum policies of its member countries, ensuring fair prices for oil producers, efficiently supplying petroleum to consuming nations, and ensuring a fair return on investment in the industry.

The 2019 attack on Saudi Aramco's oil facilities brought to light the vulnerability of global oil infrastructure and the potential for serious disruptions to the world's oil supply. This event highlighted the importance of securing crucial oil infrastructure worldwide.