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Organization of the Petroleum Exporting Countries (OPEC)

Definition

OPEC is an international organization established in 1960 by some oil-producing nations to coordinate policies on selling petroleum products. It aims to secure fair and stable prices for petroleum producers, supply regular and efficient energy to consuming nations, and earn a fair return on capital for those investing in the industry.

Analogy

Think of OPEC as a team of athletes who all play the same sport - let's say basketball. They work together to make sure they're not undercutting each other or giving away their skills too cheaply. Just like how these players would negotiate contracts and rules, OPEC countries agree on production levels to keep oil prices stable.

Related terms

Petroleum: A naturally occurring, yellowish-black liquid found in geological formations beneath the Earth's surface. It is commonly refined into various types of fuels.

Cartel: An association of manufacturers or suppliers with the purpose of maintaining high prices and restricting competition.

Crude Oil: Unrefined petroleum; a mixture that exists in liquid phase in natural underground reservoirs and remains liquid at atmospheric pressure after passing through surface separating facilities.