OPEC and OPEC+ Explained: How the Oil Cartel Moves the Price of Crude
Macro Guide, 2026
By Ken Chigbo, Founder, KenMacro, UK macro desk.
Updated 2026-06-03
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The short answer
OPEC (the Organization of the Petroleum Exporting Countries) is an intergovernmental group of major oil exporting nations, founded in Baghdad in 1960, that coordinates members’ production to influence global oil supply and stabilise prices; OPEC+ is that same bloc plus a handful of allied producers from outside the organisation, most importantly Russia, which began coordinating output together around 2016. With OPEC meaning, in plain terms, a cartel of around a dozen members led in practice by Saudi Arabia, the group manages prices through production quotas: cut output and the supply of barrels tightens, lifting price, raise it and price tends to soften. OPEC+ matters more than OPEC alone because the wider group controls roughly half of the world’s oil production, which gives it real pricing power. When the members hold together, their decisions move crude in seconds. When they fracture, as in early 2020, prices can collapse. For anyone trading oil, how OPEC affects oil prices comes down to one question at every meeting: are they adding barrels or taking them away, and will the members actually comply?
What is OPEC?
OPEC is the Organization of the Petroleum Exporting Countries, an intergovernmental body founded in Baghdad in 1960 to give big oil producers a coordinated voice over the market. Membership has moved around over the years but tends to sit at roughly a dozen members, including Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, Iran, Nigeria and others. Saudi Arabia is the dominant member and the de facto leader, because it pumps the most and carries the most weight in any decision. The core purpose is straightforward: coordinate and stabilise oil prices by managing how much each member produces. They do this through production quotas, an agreed ceiling on output for the group and a share for each country. By collectively cutting barrels they tighten supply and support price; by collectively raising barrels they loosen supply and cap it. That is the whole machine in one sentence. Quotas only work if members actually stick to them, which is why compliance is always part of the story.
OPEC+ explained: the bigger bloc
OPEC+ is OPEC plus a group of allied producers that sit outside the original organisation, the most important of which is Russia. This wider arrangement formed around 2016, when falling prices pushed the two camps to coordinate output on a larger scale rather than fight for market share. Size is the point. OPEC+ controls roughly half of the world’s oil production, so when it moves in step it has far more pricing power than OPEC on its own. Inside that bloc, Saudi Arabia plays a special role as the swing producer: it holds the most spare capacity, meaning it can bring barrels on or take them offline quickly. Spare capacity acts as the market’s shock absorber. If a war or outage knocks out supply somewhere, the world looks to Saudi Arabia to fill the gap, and if there is too much oil about, it is usually the Saudis leading the cut. The more spare capacity sitting idle, the calmer the market tends to be.
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How OPEC moves the oil price
The mechanism is supply. OPEC production cuts remove barrels and push price up, while increases add barrels and pull it down or punish rivals who are taking share. Most of the time the bloc leans on cuts to defend a floor under crude, then eases barrels back as demand recovers. The clearest lesson in what happens when it fractures came in early 2020, when Saudi Arabia and Russia briefly broke cooperation and launched a price war just as the pandemic crushed demand. Prices crashed hard. Once the two sides reconciled and agreed deep cuts, the market stabilised, and the periodic deep cuts since then show the group’s grip when it stays united. For traders this is a calendar event and a headline event at once. Scheduled OPEC+ meetings are known volatility, but unscheduled comments from ministers, especially the Saudi energy minister, can swing crude with no warning. Watch the quota decision, watch whether members are complying, and watch how much spare capacity is being held back.
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How the desk reads OPEC+
Three rules keep us straight around these events. First, trade the surprise, not the cut: oil prices in what the market already expects, so the move comes from whether the decision is deeper, shallower or more uncertain than the consensus going in. Second, respect the minister, not just the meeting. A single line from the Saudi energy minister between meetings can move crude as hard as a formal quota change, so headline risk lives all month, not just on the scheduled date. Third, treat spare capacity as the shock absorber. When a lot of idle capacity sits with Saudi Arabia, supply scares fade fast; when that cushion is thin, every outage or threat hits harder and rallies run further. Around the decision itself, expect a fast spike and a fade, so we size down into the headline and let the dust settle before committing. Put compliance, quotas and spare capacity together and you have most of the oil story. Related guides on what moves the oil price and the petrodollar are linked below.
The desk’s checklist
- Mark the meeting. Find the next scheduled OPEC+ meeting and put it on your calendar as a known volatility event for crude, the same way you would treat a central bank decision or a payrolls print.
- Read the consensus. Before the decision, work out what the market already expects: a cut, a hold or an increase, and by how much. The price reaction comes from the gap between that expectation and the outcome.
- Track compliance. Check whether members are actually pumping to their quotas. Announced cuts mean little if countries quietly overproduce, so compliance figures often matter more than the headline number itself.
- Watch spare capacity. Gauge how much idle capacity Saudi Arabia is holding back. A thick cushion calms supply scares and caps rallies; a thin one lets outages and threats push crude much further.
- Mind the ministers. Keep an ear on minister comments between meetings, especially from Saudi Arabia. An unscheduled remark can swing oil with no warning, so headline risk runs across the whole month.
Frequently asked
What does OPEC stand for?
OPEC stands for the Organization of the Petroleum Exporting Countries. It is an intergovernmental group of major oil exporting nations, founded in Baghdad in 1960. The members coordinate how much oil they produce, using agreed quotas, to influence global supply and stabilise prices. Saudi Arabia is the dominant member and the group’s de facto leader, because it produces the most and carries the most weight in any decision.
What is the difference between OPEC and OPEC+?
OPEC is the original group of around a dozen oil exporting nations led in practice by Saudi Arabia. OPEC+ is that same bloc plus a set of allied producers outside the organisation, most importantly Russia, which began coordinating output together around 2016. The plus group matters more because it controls roughly half of the world’s oil production, so it carries far more pricing power than OPEC on its own.
How do OPEC production cuts affect oil prices?
Production cuts remove barrels from the market, tightening supply and pushing prices up. Increases do the opposite, adding barrels to loosen supply and cap or lower prices. The actual move, though, depends on surprise: oil prices in what traders already expect, so a cut that is smaller than expected can still send crude lower. Compliance matters too, since announced cuts mean little if members quietly overproduce.
What is a swing producer and why is Saudi Arabia one?
A swing producer is the player that can raise or lower output quickly enough to balance the market. Saudi Arabia fills that role because it holds the most spare capacity, the ability to bring barrels on or take them offline at short notice. That spare capacity acts as a shock absorber: when supply is knocked out somewhere, the world looks to the Saudis to fill the gap and steady prices.
Why did oil prices crash in 2020?
In early 2020 Saudi Arabia and Russia briefly broke their cooperation and launched a price war, each pumping more to defend market share, just as the pandemic was crushing oil demand. Supply surged while demand collapsed, and prices fell hard. Once the two sides reconciled and OPEC+ agreed deep production cuts, the market stabilised. It is the clearest example of what happens when the bloc fractures rather than holds together.
OPEC+ decisions are among the biggest single drivers of the oil price. To trade crude around those meetings you need tight pricing and fast execution. The desk’s broker stack:
Which broker for this
You cannot trade any of this without a broker that fits how you actually trade. The desk’s stack, by what you need most.
See all eight brokers KenMacro approves, with the honest caveats
Related from the desk
Sources and further reading
Educational analysis only, not financial advice. KenMacro has commercial partnerships with some firms referenced and may earn a commission if you open an account, at no cost to you. Manage risk against your own circumstances.
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Oil reprices in violent, headline-driven gaps, and execution through a supply shock is the whole game. See the KenMacro desk guide to the best brokers for trading oil.
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