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    Group No 4 Efm

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    Ravi Vamja
    OPEC is an organization comprised of major oil-producing countries that aims to coordinate production levels to influence global oil prices. As the largest oil producers, OPEC members face a collective action problem where individual incentives to increase production undermine their joint goal of maintaining high prices. While OPEC achieved initial success raising prices in the 1970s, maintaining cooperation has proven difficult as members often exceed agreed upon quotas, leading prices to fall from their peaks.

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    Group No 4 Efm

    Uploaded by

    Ravi Vamja
    6 views11 pages
    OPEC is an organization comprised of major oil-producing countries that aims to coordinate production levels to influence global oil prices. As the largest oil producers, OPEC members face a collective action problem where individual incentives to increase production undermine their joint goal of maintaining high prices. While OPEC achieved initial success raising prices in the 1970s, maintaining cooperation has proven difficult as members often exceed agreed upon quotas, leading prices to fall from their peaks.

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    OPEC is an organization comprised of major oil-producing countries that aims to coordinate production levels to influence global oil prices. As the largest oil producers, OPEC members face a collective action problem where individual incentives to increase production undermine their joint goal of maintaining high prices. While OPEC achieved initial success raising prices in the 1970s, maintaining cooperation has proven difficult as members often exceed agreed upon quotas, leading prices to fall from their peaks.

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    6 views11 pages

    Group No 4 Efm

    Uploaded by

    Ravi Vamja
    OPEC is an organization comprised of major oil-producing countries that aims to coordinate production levels to influence global oil prices. As the largest oil producers, OPEC members face a collective action problem where individual incentives to increase production undermine their joint goal of maintaining high prices. While OPEC achieved initial success raising prices in the 1970s, maintaining cooperation has proven difficult as members often exceed agreed upon quotas, leading prices to fall from their peaks.

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    of 11

    Group no.

    4
    Subject Guided by : economics : miss Rupal Bhatt

    Hardik Vishal Anita Ravi

    Opec and the world oil market


    Summary Macro problem Micro problem Alternatives conclusion

    summary
    Our story about the towns market for water is fictional, but if we change water to crude oil, and jack and Jill to Iran and Iraq the story is close to being true. The worlds oil is produced by few countries mostly in the middle east. These countries together make up an oligopoly. Their decision about how much oil to pump are much the same as jacks and jills decision about how much water to pump

    As originally formed in 1960,opec included iran,kuwait,saudi arabia etc. By 1973, eight other nation had joined. These countries control about three-fourths of the worlds oil reserves

    Macro problem
    Opec try to raise the price of its product through a coordinated reduction in quantity produced. Opec tries to set production levels for each of the member countries

    Micro problem
    The problem that opec face is much the same as the problem that jack and Jill face in our story. Opec countries would like to maintain a high price of oil. Each member of the cartels is tempted to increase its production to get high profit Opec member frequently agree to reduce production but then cheat on their agreement

    Alternatives
    Opec was not maintaining cooperation and high price. The price of crude oil rose from $3 a barrel in 1972 to $11 in 1974 and then to $35 in1981. 1980s member countries began arguing about production level and opec became at maintaining cooperation. 1986 the price of crude oil had fallen back to $13 a barrel .

    Conclusion
    The member of opec have continued to meet regularly, but cartel has been less successful. The price of oil rose significantly in 2005. Oil demand increase in world market. The price of crude oil adjusted for overall inflation While this lack of cooperation its benefited consumer around the world.

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