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Oil price is not directly decided by OPEC. Price of any commodity is decided by demand and supply equilibrium. Besides, in the case of oil, political factor plays a major role. Also valuation or devaluation of Dollar does affect oil price.
OPEC has only one factor in its control and that is 'production'. If production is increased so as supply is more than demand, prices are likely to fall. Vice versa is also true.
But other factors also play important role.
Wiki User
∙ 13y ago
Wiki User
∙ 14y agoIn the ideal world, supply and demand determine price. If producers reduce their output without a matching decrease in the amount being used, the price will go up. If production is increased without an increase in use, the price will go down. On the other side, if there is an increased demand for oil, prices will increase until production catches up or if there should be a sudden decrease in the amount of oil being used, producers will have to lower their prices because their competitors will. This principle works only to a point because the major oil producers (OPEC) have agreed to cooperate. Assuming total supply is equal to total demand, but this group controls 90% of the supply, they can agree on a selling price and refuse to sell for less. This would create an artificial shortage.
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What method does 'OPEC' use to raise the price of oil?
OPEC uses supply and demand to determine prices. If they want to raise the price, they slow down production. The lower supply will equal higher prices.
What was the purpose of OPEC?
To stabilize oil prices,eliminate uneccesary competition among oil nations and be able to bargain for good prices on the world market
Why did OPEC not raise prices during the 1980s and what is OPEC attempting to accomplish now?
To help stablize oil prices.
What group was formed to regulate oil prices?
OPEC
How does OPEC operate?
Strictly controls all the elderly people and how they produce oil
What is the chief mandate of OPEC?
attempt to set world oil prices by controlling its production
Why did the oil exporting countries form OPEC and what effects did the subsequent rise in oil prices in the 1970s have on the Third World?
the oil exporting countries of the middle east formed OPEC in 1960 because of the Suez crisis and the oil prices rose as production decreased
Benefits of OPEC?
The OPEC is a body that links the major oil producing countries and provides a framework of how they will do the production and marketing. It gives them collective bargaining to get the best prices.
What method does 'OPEC' use to raise the price of oil?
OPEC uses supply and demand to determine prices. If they want to raise the price, they slow down production. The lower supply will equal higher prices.
How much money does saudia Arabia get per barrel of oil?
Saudi Arabia is a member of OPEC, which collectively determine oil prices for the oil producing countries in that region. As of 7 October 2014, the cost for a barrel of oil from OPEC was US $89.37.
What was the purpose of OPEC?
To stabilize oil prices,eliminate uneccesary competition among oil nations and be able to bargain for good prices on the world market
Why did OPEC not raise prices during the 1980s and what is OPEC attempting to accomplish now?
To help stablize oil prices.
What group formed to regulate oil prices?
OPEC
What group was formed to regulate oil prices?
OPEC
How does OPEC operate?
Strictly controls all the elderly people and how they produce oil
Is OPEC to blame for high gas prices If so why?
OPEC wants gas prices to be higher so that its member nations can profit more from oil.
What was OPEC?
OPEC is the Organization of the Petroleum Exporting Countries. It is an international organization and economic cartel that consists of the major oil-exporting nations in the world. Its main goal was to stop the world's largest oil refiners and producers from lowering oil prices. They wanted to gain control over the price of oil.
