What is the degree of influence of OPEC on world oil prices?

Answer:

In the short term, the Organization of countries-exporters of oil (OPEC) has a significant impact on the price of oil. In the long term, its ability to influence the price of oil is very limited, primarily because individual countries have different incentives than OPEC as a whole.

For example, if OPEC countries are not satisfied with the price of oil, it is in their interest to cut oil supply, so prices rise. However, no country really wants to reduce the supply, as this would mean lower revenues. Ideally, they want the oil price to raise until they raise revenues. This question often arises of a promise to OPEC to cut supplies, causing an immediate increase in oil prices. Over time the price moves below when the offer is not really cut.

In the end, the forces of supply and demand, determine the equilibrium price, despite claims by OPEC may temporarily affect the price of oil due to changes in expectations. One case where expectations OPEC will be changed when its share in world production of oil is reduced, with the upcoming New production from outside countries such as the United States and Canada.

Oil prices averaged $ 76 during the last 10 years the end of April 2018, a significant improvement after the oil crisis conditions in 2014-15, when overproduction caused the price drop as low as $40-$50 per barrel. Fluctuations in oil prices created a huge incentive for innovation in new technologies production, which led to the production of oil and more effective methods of drilling.

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