Every so often, a group of energy ministers flies to Vienna, or, increasingly, convenes on a video call, and the global oil market holds its breath. The gathering is an OPEC+ meeting, and whatever they decide will move prices, set drilling budgets, and influence the fiscal health of a dozen national governments. It is one of the more remarkable examples of coordinated economic power still operating openly in the world.

Here is how it works.

OPEC: The Original Alliance

OPEC stands for the Organization of the Petroleum Exporting Countries. It was founded in 1960 in Baghdad by five founding members. Saudi Arabia, Iraq, Iran, Kuwait, and Venezuela, with the explicit purpose of coordinating petroleum production policies among member states to stabilize prices and secure a fair return on investment.

The founding context matters: in 1960, major Western oil companies still controlled much of the world's oil production and set prices unilaterally. OPEC was, at its origin, a producers' rebellion against that arrangement. By the 1970s, member states had nationalized most of their oil industries and OPEC had demonstrated its market power dramatically with the 1973 oil embargo, an event that reshaped Western energy policy and sent gasoline lines around the block across the United States.

The current OPEC membership includes thirteen countries: Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, the UAE, and Venezuela. The organization's headquarters remains in Vienna, Austria, which is a city in Central Europe that has been deeply puzzled about this arrangement for sixty-five years.

The "Plus": Russia Joins the Party

After the oil price collapse of 2015–2016, OPEC reached an agreement with ten additional non-OPEC producers to coordinate production cuts. The most important of these additional members, by an enormous margin, is Russia.

The resulting OPEC+ alliance represents producers accounting for roughly 40% of global oil supply. When this group moves in concert, markets move with it.

The addition of Russia was significant for a reason beyond its production volume: it represented an acknowledgment that OPEC alone no longer had sufficient market share to manage prices effectively. U.S. shale production had grown fast enough to fill any gap OPEC tried to create by cutting its own output. The only effective response was to bring a larger portion of global production inside the coordination umbrella.

How Production Quotas Work. In Theory

Each OPEC+ meeting produces an agreement on collective production levels, usually expressed as a target for total output or as individual country baselines with agreed adjustments. Countries agree to produce no more than their allocated quota.

In practice, the compliance picture is considerably messier. Some members, notably Saudi Arabia, tend to comply precisely or even over-deliver on cuts. Others treat their quotas with a flexibility that diplomats would describe as "creative." Nigeria and Iraq have historically been frequent quota violators, producing above their limits when they could and generating tension within the group.

Quota compliance is tracked by secondary sources, independent data providers, tanker tracking firms, and satellite analysis, since OPEC has no enforcement mechanism beyond peer pressure and the reputational consequences of being publicly identified as a cheater. The peer pressure is not nothing, but it is also not a fine.

The Saudi-Russia Dynamic

The Saudi-Russia relationship is the central axis around which OPEC+ rotates. Saudi Arabia is the world's largest oil exporter and OPEC's unquestioned leader; it has historically acted as the group's "swing producer," willing to adjust its own output significantly to balance the market. Russia is the second-largest non-OPEC producer in the group and brings geopolitical weight that Saudi Arabia alone cannot provide.

The two countries do not always agree. In March 2020, at the onset of the COVID pandemic, negotiations collapsed, Saudi Arabia launched a price war by flooding the market, and WTI briefly went negative for the first time in history. They reconciled within weeks, but the episode illustrated that the alliance is a coalition of interests, not a permanent friendship.

The Shale Ceiling

OPEC+'s ability to manage prices has a structural constraint that did not exist before approximately 2010: U.S. shale production responds quickly to price signals. When OPEC+ cuts production and prices rise, American producers drill more wells and bring new supply online within months, effectively capping the upside of any price rally.

This dynamic means OPEC+ tends to target a price range rather than a specific price level: high enough to fund their national budgets, but not so high that it triggers a shale supply response that erodes their market share. Finding that range, and keeping it, is the central challenge of modern OPEC+ policy.

What to Watch

When following OPEC+ for its market impact, the key signals are:

  • Official meeting outcomes, the headline production level and any changes to the existing agreement
  • Compliance data, whether members are actually producing at their stated levels (secondary source data, published monthly by OPEC itself)
  • Voluntary additional cuts. Saudi Arabia in particular has occasionally announced unilateral cuts beyond the agreed group level, which typically move markets more than collective decisions
  • Meeting scheduling changes, an unscheduled emergency meeting almost always signals that prices have moved to a level the group finds uncomfortable

OPEC+ does not control the oil price. But it influences it more than any other single entity in the market. That distinction is worth keeping in mind.

This article is for informational purposes only and does not constitute financial or investment advice.