What is OPEC Basket?

1319 reads · Last updated: December 5, 2024

The OPEC Basket, or OPEC Basket Price, is a significant benchmark used by the Organization of the Petroleum Exporting Countries (OPEC) to gauge international oil prices. This price is a weighted average of various crude oil blends produced by OPEC member countries. The OPEC Basket reflects the market price of the primary crude types produced by OPEC members, providing a comprehensive and authoritative measure. The basket price is updated daily and is widely used to analyze global oil market trends and to formulate OPEC's production policies.

Definition

The OPEC Basket is a significant reference indicator used by the Organization of the Petroleum Exporting Countries (OPEC) to measure international oil prices. It is composed of a weighted average of crude oil prices from various OPEC member countries. The OPEC Basket price reflects the market prices of the main types of crude oil produced by OPEC member countries, offering broad representativeness and authority. This price is updated daily and is widely used to analyze global oil market dynamics and formulate OPEC's production policies.

Origin

The concept of the OPEC Basket price originated in 1987 when OPEC decided to adopt a basket price as a reference to better reflect the market conditions of its member countries' crude oil. Initially, the basket included seven different types of crude oil, and over time, OPEC adjusted the composition of the basket to better reflect market changes.

Categories and Features

The OPEC Basket price includes various types of crude oil from OPEC member countries, such as Algeria's Saharan Blend, Angola's Girassol, and Nigeria's Bonny Light. The weight of each crude type in the basket is adjusted based on its market importance and production volume. The main features of the OPEC Basket price are its representativeness and authority, as it covers the major crude oil export types of OPEC member countries.

Case Studies

A typical case is during the 2008 global financial crisis when the OPEC Basket price plummeted from over $140 per barrel in July 2008 to below $40 per barrel in December 2008. This price fluctuation prompted OPEC to cut production to stabilize the market. Another case is during the 2020 COVID-19 pandemic, when the OPEC Basket price significantly dropped due to a sharp decline in demand, leading the OPEC+ alliance to reach a historic production cut agreement to address the market shock.

Common Issues

Common issues investors face when using the OPEC Basket price include misconceptions about its volatility, thinking it can directly predict future oil prices. In reality, the OPEC Basket price is an indicator reflecting current market conditions, not a forecasting tool. Additionally, investors should be aware that the OPEC Basket price can be influenced by geopolitical factors.

Suggested for You

Refresh
buzzwords icon
Zero-Floor Limit
The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.
738 learned

Zero-Floor Limit

The term "zero-floor limit" refers to a policy whereby merchants are required to obtain authorization for every transaction processed at their store, regardless of its size. By contrast, some stores only require authorization for transactions that are above a certain size, with that size threshold being known as the store's floor limit.

buzzwords icon
Lisbon Treaty
The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies.The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union.
1 K learned

Lisbon Treaty

The Lisbon Treaty, also known as the Treaty of Lisbon, updated regulations for the European Union, establishing a more centralized leadership and foreign policy, a proper process for countries that wish to leave the Union, and a streamlined process for enacting new policies.The treaty was signed on December 13, 2007, in Lisbon, Portugal, and amended the two previous treaties that established the foundation for the European Union.

buzzwords icon
Labor Intensive
The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.
1 K learned

Labor Intensive

The term "labor-intensive" refers to a process or industry that requires a large amount of labor to produce its goods or services. The degree of labor intensity is typically measured in proportion to the amount of capital required to produce the goods or services: the higher the proportion of labor costs required, the more labor-intensive the business.

buzzwords icon
Fast-Moving Consumer Goods
Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.
2 K learned

Fast-Moving Consumer Goods

Fast-moving consumer goods (FMCGs) are products that sell quickly at relatively low cost. FMCGs have a short shelf life because of high consumer demand (e.g., soft drinks and confections) or because they are perishable (e.g., meat, dairy products, and baked goods).They are bought often, consumed rapidly, priced low, and sold in large quantities. They also have a high turnover on store shelves. The largest FMCG companies by revenue are among the best known, such as Nestle SA. (NSRGY) ($99.32 billion in 2023 earnings) and PepsiCo Inc. (PEP) ($91.47 billion). From the 1980s up to the early 2010s, the FMCG sector was a paradigm of stable and impressive growth; annual revenue was consistently around 9% in the first decade of this century, with returns on invested capital (ROIC) at 22%.

buzzwords icon
Negotiable Instruments
A negotiable instrument is a signed document that promises a payment to a specified person or assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.Common examples of negotiable instruments include personal checks, cashier's checks, money orders, certificates of deposit (CDs), promissory notes, and traveler's checks. The person receiving the payment, known as the payee, must be named or otherwise indicated on the instrument. Because they are transferable and assignable, some negotiable instruments may trade on a secondary market.
1 K learned

Negotiable Instruments

A negotiable instrument is a signed document that promises a payment to a specified person or assignee. In other words, it is a formalized type of IOU: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on-demand.Common examples of negotiable instruments include personal checks, cashier's checks, money orders, certificates of deposit (CDs), promissory notes, and traveler's checks. The person receiving the payment, known as the payee, must be named or otherwise indicated on the instrument. Because they are transferable and assignable, some negotiable instruments may trade on a secondary market.

© 2026 Longbridge｜Disclaimer