Quick Answer
Yes, by economic definition OPEC is a cartel—a group of producers coordinating output to influence prices. It meets regularly to set production quotas. However, OPEC's cartel power is limited: members often cheat on quotas, non-OPEC producers now supply 60% of the market, and U.S. shale responds to price signals, constraining how high OPEC can push prices.
Key Numbers
Full Analysis
In-depth exploration with citations and evidence
What Makes a Cartel#
Economically, a cartel is defined by:
- Agreement among competitors
- To restrict output or fix prices
- For mutual benefit
OPEC meets all criteria:
- 13 member countries
- Regular meetings to set quotas
- Explicit goal of price stability (higher prices)
OPEC's Structure#
Members
Saudi Arabia, Iraq, Iran, UAE, Kuwait, Venezuela, Nigeria, Libya, Algeria, Angola, Congo, Equatorial Guinea, Gabon
OPEC+ Extension
Additional 10 allies led by Russia coordinate since 2016
Decision Making
- Regular ministerial meetings
- Production quotas assigned to members
- Compliance monitored
Why OPEC's Power Is Limited#
Internal Challenges
- Members often exceed quotas
- Different fiscal needs (Saudi vs Venezuela)
- Political tensions between members
External Challenges
- U.S. shale responds to price signals
- Other non-OPEC production growing
- Demand-side alternatives emerging
- High prices accelerate competition
Legal Status#
OPEC is a cartel, but:
- Sovereign nations, not private companies
- Exempt from antitrust laws
- Recognized international organization
- Some U.S. bills have attempted to challenge this
Steelmanned Counterarguments
We present the strongest version of opposing viewpoints—not strawmen.
1OPEC no longer matters because of U.S. shale.
OPEC still matters—its decisions move prices significantly. However, its power is constrained. The 2020 price war showed that OPEC can't ignore market forces or non-OPEC supply responses.