Jean-Luc Bertholet

How does OPEC allocate quotas

Abstract Since 1982, members of the Organization of Petroleum Exporting Countries (OPEC) have frequently agreed upon an overall oil production ceiling and individual production quotas. Nonetheless, OPEC has never adopted a published, explicit formula for allocating those quotas. While quotas were seemingly allocated on an ad hoc basis, it is discernible that taken together, the allocations display remarkable consistency. This article attempts to demystify this question by modeling and testing OPECs quota allocation behavior. While all the proposed models appear to be supported by the results, the authors prefer the simplest formulations.

OPEC production quotas and their application to non-OPEC countries☆

Abstract OPEC has employed production or supply quotas on various occasions since March 1982 in an effort to control oil prices. No explicit formula has been used to allocate quotas among members. Nevertheless, an implicit formula may be derived from OPECs observed behaviour. The principal elements in the formula so derived are each individual members oil production capacity and (merchandise) imports per capita. When an effort is made to extend this implicit formula to cover selected non-OPEC oil exporters, the results are unrealistic in terms of political acceptability. Therefore prospects for cooperative production restraint between OPEC and non-OPEC have been, and remain, extremely slim.