OPEC+
What it is, what it does, and what it can't do — the cartel that lost its pricing power and got it back
On November 27, 2014, the Organization of the Petroleum Exporting Countries held its 166th ordinary ministerial meeting in Vienna. Brent crude had declined from an early-2014 peak of around $115 per barrel to roughly $77 by the meeting day, driven by the rapid growth of U.S.
shale production and softening global demand. The expected market response was a coordinated production cut by OPEC — the cartel had moved oil prices for four decades by adding or withholding supply, and the playbook in a falling market was to cut production until prices recovered. Saudi Arabia, the dominant OPEC producer and the sole 'swing producer' that historically absorbed the burden of cuts, did not propose a cut.
The ministerial communique announced that members would maintain the existing production ceiling of 30 million barrels per day. The implicit decision was that OPEC would defend market share rather than price; the burden of supply discipline would fall on the marginal producer — increasingly U.S.
shale — rather than on Saudi Arabia.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 7 sections and ends with 6 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1Why OPEC's pricing power is conditional
- 2What OPEC+ can and cannot do
- 3The shale-bounded OPEC+ pricing model
- 4Modern OPEC+ episodes — supply decisions and Brent response
- 5April 12 2020 — the largest coordinated cut in OPEC+ history
- 6Where to see this on the platform
- 7Summary