Definition: The Organization of Petroleum Exporting Countries (OPEC) is an organization of 12 oil-producing countries that produce 46% of the world's oil. OPEC members are Algeria, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela. In 1960, OPEC countries formed an alliance to regulate the supply, and to some extent, the price of oil. These countries realized they had a non-renewable resource. If they competed with each other, the price of oil would be so low that they would run out sooner than if oil prices were higher.
OPEC's goal is to keep the price of oil at around $70 per barrel. If it is much higher, than other countries would have the incentive to drill new fields which are too expensive to open when prices are low. However, OPEC cannot completely control the price of oil, which is traded on the futures market. Much of the oil price is determined by these commodities traders. For more on this, see Why Are Oil Prices So High? (Updated January 3, 2010)
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The meetings of OPEC are watched closely to determine if they will increase or decrease oil production.
