Why do the countries belonging to OPEC not want to produce too much oil at one time?

Answer 1

The Organization of Petroleum Exporting Countries (OPEC) is one such group that is likely to sell oil to Japan. The twelve OPEC countries are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Each of these nations has vast oil reserves which the world has depended on over the last century. Since oil is in such high demand and many of these countries have economic problems, they banded together to create a cartel in 1960. A cartel is an agreement in which a group of producers try to influence the price of their good by limiting its supply.

OPEC members realized that if oil prices were too low, they would produce too much and not earn as much money. They also realized that if prices became too high, the overall world economy could be damaged and OPEC would not sell as much oil. Today, OPEC tries to stabilize oil prices by setting quotas for how much each member country is allowed to produce.

There are many other organizations that try to influence trade between nations. One of the most significant is the World Trade Organization (WTO). The WTO attempts to reduce barriers to trade among its member countries, which today includes most of the world. The biggest barriers to trade are tariffs. Tariffs are taxes on imported goods which cause them to become more expensive. If a country puts a high enough tariff on a foreign made good, most people would not be able to afford it.