OPEC’s (Organization of the Petroleum Exporting Countries) member nations are Iran, Iraq, Ecuador, Kuwait, Saudi Arabia, Algeria, Angola, Nigeria, Kuwait, Venezuela, Qatar, and the UAE (United Arab Emirates). OPEC produces 40% of the global crude oil production. It has a 60% of share in global crude oil exports. OPEC operates as a cartel. It can influence the crude oil market with this type of market share.
In the last meeting held in November 2014, OPEC refused to cut back on the collective crude oil output of 30 MMbpd (million barrels per day). OPEC continued to produce more than the collective target of 30 MMbpd. In May 2015 it produced 31.2 MMbpd of crude oil.
OPEC’s top crude oil producers—Saudi Arabia and Iraq—produced 10.31 MMbpd and 3.66 MMbpd of crude oil, respectively, in April 2015.
On June 5, 2015, OPEC decided to maintain the same strategy. Collectively, OPEC will continue to produce 30 MMbpd of crude oil for the next six months. The massive production will pressure crude oil prices. As a result, it will put pressure on US shale oil producers like Whiting Petroleum (WLL), Continental Resources (CLR), and Marathon Oil (MRO). OPEC’s fight for market share continues with this massive oil production strategy.
Oil and gas ETFs like the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and the Select Sector SPDR Fund ETF (XLE) also increased in line with the direction of WTI’s (West Texas Intermediate) crude oil price movement on June 5.