The Organization of Petroleum Exporting Countries (OPEC, including Saudi Arabia, UAE, Venezuela, Algeria, Indonesia, Iraq, Iran, Kuwait, Libya, Nigeria and Qatar) seems less of a menace now that the United States oil and natural gas production is booming. But OPEC continues to be a major exporter that can influence global oil supply and prices. However, OPEC countries are very dependent on export revenues to provide the jobs and services demanded by their populations, so a major shift in production volumes and prices is unlikely.
The chart above, published by the U.S. Energy Information Administration, shows that lower OPEC production quotas (which may not be reflected in actual production levels) are soon followed by an increase in world oil prices, and increases in the quotas lead to lower oil prices.
One interesting statistic that points to the quality of OPEC fields and their potential for high productivity, and dominance of prices, for many decades is is that OPEC countries produced about 32 million barrels of oil per day from 37,000 wells in 2012, while the U.S. produced about 6.5 million barrels per day from over 800,000 wells. And, as of 2012 OPEC held about 80 percent of the world’s proven crude oil reserves and over 45 percent of global proven natural gas reserves.
Global natural gas prices have become a topic of special interest in the U.S. as natural gas exports from the lower-48 will start in 2015. OPEC, Russia and the U.S. produce similar volumes of natural gas–each produces about 20 percent of global marketed production. Such a divided global market prevents cartel-like price manipulation. OPEC and Russia both sell their gas exports at prices higher than U.S. spot prices and some countries purchase gas at about the energy equivalent to oil prices. (A barrel of oil is approximately equivalent to 5.8 thousand cubic feet, mcf.) This has led to expectations that U.S. gas producers will receive higher prices in the export market than they do domestically. Others think that increased global natural gas supplies will deflate prices. Time will tell.