OPEC
Organization and structure
The organisational logic that underpins OPEC is that it is in the collective interest of its members to limit the world oil supply in order to reap higher prices. However, the main problem within OPEC is that it is individually rational for members to cheat on commitments and produce as much oil as possible.
Organization and structure
In June 2020, all countries participating in the OPEC+ framework collectively agreed to the introduction of a Compensation Mechanism aimed at ensuring full conformity with and adherence to the agreed-upon oil production cuts. This initiative aligns with one of OPEC's stated objectives: to maintain a stable oil market, which, notably, has been relatively more stable than other energy commodities.
International cartel
International commodity agreements covering products such as coffee, sugar, tin and more recently oil (OPEC: Organisation of Petroleum Exporting Countries) are examples of international cartels which have publicly entailed agreements between different national governments.
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