The Economy of Saudi Arabia
OPEC and Oil Price Management
Saudi Arabia leads OPEC and OPEC+, adjusting output to influence prices, sometimes at a cost to its own revenue.
The kingdom moves the market.
OPEC
Founded in 1960, the group coordinates oil policies of its members.
Swing producer
Saudi Arabia keeps spare capacity so it can raise or cut output.
OPEC+
Since 2016, OPEC works with Russia and other producers.
Price wars
In 2020, a dispute with Russia briefly led to a price collapse.
A production cut
When prices fall, OPEC+ members agree to cut output to support the price.
Assuming OPEC always controls prices
Other producers and demand also matter.
Key takeaways
- OPEC was founded in 1960.
- Saudi Arabia is the swing producer.
- OPEC+ includes Russia.
- Price wars can occur.
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