OPEC and IEA: Comparing Objectives and Conducting a SWOT Analysis

This report critically appraises the objectives, similarities, and differences between OPEC (Organization of the Petroleum Exporting Countries) and IEA (International Energy Agency), including a SWOT analysis of both organizations. OPEC, founded in 1960, aims to coordinate petroleum policies and stabilize international oil markets, while the IEA, established in 1974, focuses on energy security and cooperation among member countries in response to oil supply disruptions. The report highlights the contrasting roles of OPEC as a seller of crude oil seeking higher prices and IEA as a buyer aiming to minimize costs. It discusses their differing backgrounds and objectives, with OPEC representing developing oil-exporting countries and IEA representing industrialized oil-consuming nations. The SWOT analysis identifies key factors impacting both organizations, such as opportunities for OPEC in accessing productive contributions and threats related to economic marginalization, and for IEA, the challenges and opportunities presented by fluctuating oil prices and the need to balance economic growth with carbon emissions reduction. Desklib offers a platform to explore similar assignments and resources.

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A study about OPEC and IEA
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1A STUDY ABOUT OPEC AND IEA
This report’s purpose is to critically appraise few differences as well as similarities
between OPEC and IEA including several objectives as well as similarities. Lastly, a SWOT
analysis of both of them.
OPEC stands for Organisation of the Petroleum Exporting Countries. It is a perpetual,
organization of intergovernmental. It was created at the conference of Baghdad conference on
10th-14th September, 1960 by the country namely Iraq, Kuwait, Iran, Saudi Arabia as well as
Venezuela. Its headquartered is situated at Vienna, Austria since the year of 1965 (Griffin and
Teece 2016).
IEA stands for International Energy Agency. It was founded in the year of 1974. It
helps all other countries so that they all can cooperatively give a response to oil supply
disruptions. Several criteria a country should have regarding the energy security in order to
join IEA. In recent times, IEA consists of 30 member countries along with 1 accession
country and 7 association countries. Dr. Fatih Birol, an executive director, is the head of the
management of IEA secretariat (Blok and Nieuwlaar 2016).
Objectives of OPEC
The objectives of OPEC are as follows: -
 To co-ordinate as well as merge the policies of petroleum of the member countries
 To find out the best means for the protection of their individual as well as collective
interests (Dike 2013).
 To seek out the ways as well as means in order to ensure the price stabilization in oil
markets internationally with a view to eliminate the fluctuations that is harmful and
unnecessary.

2A STUDY ABOUT OPEC AND IEA
Objectives of IEA
The IEA process encourages an organized participating in an assessment of integrated
environment.
Objectives of IEA are: -
 Bringing together the organizations and its people with generating an interest in IEA that
may not clash with the collaboration in history.
 Involving the policy makers for securing their support for the sake of the process along
with its crucial findings (Jensen 2017).
 Facilitating the interaction process based upon a methodology which is common, that is
fostering the dialogue in between policy and science
Differences as well as similarities between OPEC and IEA
The two well-known international organizations of energy namely OPEC and IEA
which sometimes can be signified as a double-sided coin. Two faces but both have different
kinds of appearances. Similarly both their backgrounds are different from each other as well
as both their objectives regarding the formation of the companies are often differing each
other. But apart from these things they both are in need of each other to carrying out their
businesses flawlessly. Their energy as well as interest, they are constantly harmonizing each
other. In simple words, OPEC is referred to as the seller of the crude oil and on the other
hand IEA is referred to as the buyer of the crude oil. OPEC is so dedicated to sell their stock
of crude oil with the higher price if possible, so that it can make an effort in optimization of
the revenues related to its member countries (Ghassan and AlHajhoj 2016). Keeping in mind
of the conflicting nature, IEA anticipates in buying the crude oil as lowest as possible in
terms of money from the available market, in order to minimize their production cost involve

3A STUDY ABOUT OPEC AND IEA
in order to refine the crude oil into products related to petroleum like diesel, gasoline as well
as jet kerosene.
OPEC is referred to as an association of the main oil exporting as well as producing
countries across the world. All of their members are being categorized as a less-industrial or
developing countries (Hochman and Zilberman 2015). On the other hand, IEA is represented
themselves as the representative of the main countries of oil consuming in the world. All of
the member countries of IEA are also can be included as the member of organization for
economic related cooperation and development, or mostly industrial countries which is a
developed one.
Secretariats of both the company namely IEA and OPEC in principle serve as a role
of advisory. They are referred to as the agencies of think-tank which provides
recommendations as well as advice to their respective member countries on issues of strategic
that related to the policies of energy and oil. The activities which they carried out on a daily
basis are analyses, research as well as monitoring over the current development of the energy
and oil markets across the world. Due to these analyses, the overall outcomes that it produces
are then published regularly in their reports of oil markets as well as the outlooks of
oil/energy, reflecting their standpoints’ voices on a range of the critical energy and oil issues
of the world. These analyses are then being used as a basis of cognisant decision making
process by both the discussed agencies for giving the interest to their member states.
IEA is referred to as an autonomous organization of mostly the industrial advanced
countries and headquarter is located in Paris, France (Swan 2015). The creation of IEA that
within the framework of OECD in the year of 1974, in giving reaction to the crisis of the oil
in the year of 1973 when launching of an embargo are being initiated by OAPEC over the
sales of their crude oil to the world as a threat to protest in contradiction of the decision of

4A STUDY ABOUT OPEC AND IEA
USA for giving support to Israel in the war of Yon Kipur (Shaum 2019). The main mission of
IEA is to consolidate a strategy which is collective for its 28 member states in order to secure
their needs of energy in an effective as well as sustainable way. Hence the mission of IEA is
to focus on the needs for the required security in supply of sustainable energy and oil. This
process is indeed in contrast with the mission of OPEC which highlights the needs for the
security demand of sustainable oil, this is to certify that there must be the presence of markets
or buyers for selling of their oil.
SWOT analysis of OPEC
The major issues that raised which relates the economy is investments to create as
well as sustain the growth of the economy, formation of the capital within the country,
especially the necessities arise when the country is a developing one. A SWOT analysis is
referred to a method that generally applied in order to analyse both the environments for
attaining a systematic approach as well as support for a decision which are made by them
(Bull 2016). Furthermore, SWOT does not mean to determine systematically the importance
of the available factors or by the means of accessing the alternative decision with giving
reference to the mentioned factors. In the above study, a SWOT analysis that is based on
quantitative AHP and it has been proposed for determining the priorities systematically
among the all the factors of SWOT (Scolozzi 2014).
SWOT includes no means of determining analytically the impact of the factors or of
assessing the decision alternatives with respect to the factors. In this study, a quantitative
AHP based SWOT analysis has been proposed in order to determine the priorities among the
factors of SWOT systematically (Scolozzi 2014). The following ranking are being shown the
findings of each and every group priority of SWOT such as strength (whose group weight is
8.9%), weaknesses (3.52%), opportunities (whose 17.2%) as well as threats (that is 8.7%). In
accordance with the analysis, the most impactful factors in SWOT is from the opportunities

5A STUDY ABOUT OPEC AND IEA
group. These specific factors become the most impactful factors that needs to be fully
considered with an overall calculated value of priority which is of 0.084. The another factors
which is considerable are being ranked as the following, keeping in mind of their priority, the
access of Iran to the available productive contributions up and above the OPEC countries’
current quota (0.065), the access that the country are getting regarding the technologies as
well as the worldwide exploration of the technology sectors, production and development of
oil as well as gas fields (0.044), being marginalised in the economy globally and the domestic
industry of oil (0.037), productivity and availability of labour, abundant young as well as
cheap (about 0.036), giving access to the foreign exchange is greater to meet the current
expenses as well as capital growing state (0.034), are the factors in which special attention
needs to be given (Ghahremanian and Mahrokhzad 2014).
SWOT analysis of IEA
Since the month of June, 2014 there are closely half the price drop of crude oil that
has open up the chances for creating new opportunities and new challenges as well (Caldara,
Cavallo and Iacoviello 2018). This research allows the method of SWOT to analyse the
importance of economical oil on the system of global economy and emissions of carbon, the
opportunities of climate are being explored, and the identification of challenges of lower
down the prices of oil. In addition, it resists that the prices of oil falls and that too boosting
the growth of the economy, but it leads to the production of more and more carbon pollutants,
thus it accelerates the global warming. Nevertheless, economical oil helps in the reduction of
subsidies of fossil fuel (Aydin 2014). Moreover, we argue about the critical threat of social
factors in order to remove the subsidies of fossil fuel. While there is a downfall of the prices
of oil that exerts downward pressure on coal as well as gas, the introduction can be initiated
of subsidies removal and carbon tax without the rise in the price of energy. As there is a

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confusion about the availability of the economical oil so they should remove the subsidies of
fossil fuel as soon as possible (Wang and Li 2016).

7A STUDY ABOUT OPEC AND IEA
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