OPEC

The article described below reports on OPEC's recent meeting. Google the title if the article does not load when you click on the link.

Here are some questions to consider.

1. Why are the countries pumping more oil that the limit they set?
2. What is happening to the willingness of countries to abide by output restrictions? Why?
3. Do Russia and the US oil producers benefit or lose when OPEC sets and abides by output restrictions?

OPEC Keeps Output Unchanged
by: Summer Said, Bill Spindle and Benoit Faucon
Jun 06, 2015
Click here to view the full article on WSJ.com

TOPICS: Cartels, Oil Markets

SUMMARY: OPEC on Friday said the cartel would keep its collective output level unchanged at 30 million barrels a day, the second time in six months it decided to take no action amid a global glut of crude and weak oil prices.

CLASSROOM APPLICATION: Students can evaluate the cause of OPEC's reduced market power. They can also evaluate the benefit to non-OPEC oil producers of the cartel's output restrictions.

QUESTIONS: 
1. (Introductory) Why has OPEC decided to keep its collective output unchanged?

2. (Advanced) Why has OPEC's role in the world's oil market fundamentally changed in the past year?

3. (Advanced) Which OPEC nations are expressed satisfaction with the group's decision to allow members to unilaterally set the amount of oil they extract? Which are dissatisfied?

Reviewed By: James Dearden, Lehigh University