Opec

By THIS IS MONEY
Updated: 11:37 EST, 16 April 2008

We explain the workings of the organisation that controls the world's oil supplies.

What is it?

The oil cartel that has dominated world markets since 1960, the Organisation of the Petroleum Exporting Countries controls more than 75% of global reserves. Saudi Arabia, the United Arab Emirates and Iraq rank among its 11 members.

How important is it?

Opec nations churn out 43% of the world's oil production every year. Decisions at its conferences-about how much to pump can have a major influence over world oil prices.

Its most infamous episode came when it stopped shipping oil to countries that supported Israel in the 1973 Yom Kippur War, leading to a four-fold spike in prices.

But in some ways Opec is a shadow of its former self. Discipline among its members is lacking and the rise of non-members such as Russia means its ability to control prices has diminished.

What is it doing now?

Pumping oil like there is no tomorrow. Although prices have slid back to five-month lows of around $65, they remain at more than double their levels at the beginning of the decade.

That might sound like good news for Opec - but they do not want to plunge their customers into recession. At this week's meeting in Vienna, ministers from Opec nations agreed to keep output at a 25-year high.