UNIDENTIFIED FEMALE: Whenever you hear about oil, the word OPEC isn't far behind. OPEC stands for the Organization of Petroleum Exporting Countries.
It's a group of 12 nations that have a lot of clout in the energy market because they produce about 1/3 of the world's total oil and exports it around the globe. That's about 30 million barrels of oil every single day. It was formed in 1960. The goal, to coordinate oil production to ensure that members are pumping enough supply to meet demand.
If all 12 countries play by the rules, it can help to regulate and stabilize global oil prices. But there's also plenty of major oil producing nations that are not part of the OPEC club including the United States, Canada and Mexico and Russia. And they don't attend OPEC meetings and as such they're not bound by the cartel's decisions. And as these nations have increased their production over the past few years, OPEC's influence in the market has plunged.
There's now an excess of oil supply which has pushed down prices significantly. The price drop has caused political problems in some OPEC countries that rely on oil sales heavily to fund their governments. Well, OPEC's grip on oil may be getting weaker, but it also means lower prices at pumps around the world.
CARL AZUZ, CNN 10 ANCHOR: We started with that today because it helps us explaIn the News that Qatar, a Middle Eastern country who's economy is heavily dependent on oil and natural gas sales, is pulling out of OPEC.
Here's why that's significant. For one thing, it's a set back for the Organization of Petroleum Exporting Countries. OPEC currently has 15 members. It will be down to 14 when Qatar officially leaves on January 1st and this comes at a time when OPEC is trying to increase it's membership. Over the past two years, the African countries of Congo and Equatorial Guinea have joined OPEC. One analyst says, Qatar's departure will reduce OPEC's oil production to where it was before the two new members signed up.
There's also an issue of timing. OPEC's members and other major producers of oil are scheduled to meet this week to talk about reducing their production. They want oil prices to be higher. Some experts say Qatar's withdraw from OPEC probably won't have a major effective on the oil market but others say it could cause complications within OPEC.
But why is Qatar leaving? It's been a member of OPEC for almost 60 years.
Last year, several Arab countries including some other members of OPEC cut off their trade and diplomatic relationships with Qatar. They said it was because of Qatar's support for terrorist groups. Qatar has denied doing that but it's also increased it's production of natural gas to help it's economy. OPEC doesn't oversee natural gas production and Qatar's a major producer of it. In fact, it's largely because of natural gas production that Qatar has one of the highest per capita income levels in the world.