OPEC collects price data on a "basket" of crude oils, and uses average prices for these oil streams to develop an OPEC reference price to monitor world oil market conditions. From January 1, 1987 to June 15, 2005, OPEC calculated an arithmetic average of seven crude oil streams, including: Algeria's Saharan Blend, Indonesia Minas, Nigeria Bonny Light, Saudi Arabia Arab Light, Dubai Fateh, Venezuela Tia Juana and Mexico Isthmus (a non-OPEC oil) to estimate the OPEC basket price. This OPEC basket price averaged $36.05 per barrel in 2004, $28.10 per barrel in 2003, $24.36 per barrel in 2002, $23.12 per barrel in 2001, and $27.60 per barrel in 2000.

At its 136th meeting to review oil markets on June 15, 2005, OPEC decided to change both the composition of the basket, and the way that it is calculated. According to OPEC, the changes were made to better reflect the average quality of crude oil in OPEC Member Countries. Effective June 16, OPEC's reference basket now consists of eleven crude streams representing the main export crudes of all member countries, weighted according to production and exports to the main markets. The crude oil streams in the basket are: Saharan Blend (Algeria), Minas (Indonesia), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and BCF 17 (Venezuela). According to OPEC, the API gravity for the new Basket is heavier, at 32.7º compared to 34.6 º for the previous basket of seven crudes. In addition, the sulphur content of the new Reference Basket is more sour at 1.77%, compared to the previous basket of 1.44%. OPEC calculated that on June 15 (the last day that the old reference basket was calcuated), the new basket would have averaged $50.03 barrel, over $2 per barrel less than the old basket price of $52.26 per barrel.

In addition to the OPEC Basket, several other crude oil prices are used to follow world oil market conditions. Because the U.S. benchmark, West Texas Intermediate (WTI) crude oil, is a very light, sweet (low sulfur content) crude, it is generally more expensive than the OPEC basket, which is an average of light sweet crude oils such as Algeria's Saharan Blend and heavier sour crudes (with high sulfur content) such as Dubai's Fateh. Brent is also lighter, sweeter, and more expensive than the OPEC basket, although less so than WTI.

At its March 2000 meeting, OPEC set up a price band mechanism triggered by the OPEC basket price, to respond to changes in world oil market conditions. According to the price band mechanism, OPEC basket prices above $28 per barrel for 20 consecutive trading days or below $22 per barrel for 10 consecutive trading days would result in production adjustments. This adjustment was originally automatic, but OPEC members changed this so that they could fine-tune production adjustments at their discretion. Since its inception, the informal price band mechanism has been activated only once. On October 31, 2000, OPEC activated the mechanism to increase aggregate OPEC production quotas by 500,000 barrels per day.

On September 1, 2005, the OPEC basket price rose to $61.37 per barrel, its highest price since the price band mechanism was established. Since December 2, 2003, when the basket price last crossed the $28 per barrel threshold, the OPEC basket price has traded above the $28 per barrel level for 455 consecutive trading days through August 4, 2005. At its January 30, 2005 meeting, OPEC decided that market changes had rendered the band unrealistic, and decided to temporarily suspend the price band mechanism.

MEETINGS, ANNOUNCEMENTS, AND RELATED EVENTS

The OPEC countries hold meetings at OPEC headquarters in Vienna, Austria, where they decide issues and make announcements that influence world oil markets and prices. Quota decisions apply to all OPEC countries excluding Iraq (the OPEC 10), which has been excluded from all quota decisions in recent years. Major developments in the past year include:

January 12, 2003: OPEC held its 123rd meeting to review oil markets in Vienna, Austria. OPEC decided to raise its production quotas from 23 million barrels per day to 24.5 million barrels per day, effective February 1, 2003, in order to ensure adequate supplies of crude in response to the oil supply shortfall in Venezuela.

March 11, 2003: OPEC held its 124th meeting to review oil markets in Vienna, Austria, leaving OPEC output quotas unchanged.

March 17, 2003: The UN Secretary-General announced the temporary withdrawal of all humanitarian personnel from Iraq. Although oil continued to flow through the oil pipeline from northern Iraq to the Turkish Mediterranean port of Ceyhan, the UN’s independent oil overseers were withdrawn from the Iraqi oil platform at Mina al-Bakr in the south. These are the only outlets for Iraqi oil exports allowed under the UN's Oil-for-Food Program.

March 19, 2003: War in Iraq began with the bombing of Baghdad.

March 20, 2003: OPEC resolved to make up for any supply shortfall resulting from "events unfolding in Iraq". Member countries pledged to use their available excess capacities to ensure continued supply.

April 24, 2003: OPEC held its consultative meeting in Vienna, Austria. OPEC decided to reduce actual OPEC 10 production by 2 million barrels per day to the new OPEC 10 production quota of 25.4 million barrels per day, effective June 1, 2003 (the production figure is from OPEC).

May 22, 2003: The UN Security Council adopted Resolution 1483, lifting civilian sanctions on Iraq, ending UN monitoring of the export of crude oil and petroleum products from Iraq, and phasing out the UN's Oil-for-Food Program over the next six months.

May 27, 2003: The U.S. lifted most of its remaining sanctions on Iraq, thereby implementing U.N. Security Council Resolution 1483.

June 3, 2003: The thirteenth phase of Iraq's oil-for-food program ended.

June 11, 2003: OPEC held its 125th meeting to review oil markets in Doha, Qatar, leaving OPEC output quotas unchanged.

July 31, 2003: OPEC held its 126th meeting to review oil markets in Vienna, Austria, leaving OPEC output quotas unchanged.

September 24, 2003: OPEC held its 127th meeting to review oil markets in Vienna, Austria. OPEC decided to lower its production quota from 25.4 million barrels per day to 24.5 million barrels per day, effective November 1, 2003.

November 21, 2003: The UN's oil-for-food program closed after nearly 7 years of operation.

December 4, 2003: OPEC held its 128th meeting to review oil markets in Vienna, Austria, leaving OPEC output quotas unchanged.

February 10, 2004: OPEC held its 129th meeting to review oil markets in Algiers, Algeria. OPEC decided to lower OPEC's production quota from 24.5 million barrels per day to 23.5 million barrels per day, effective April 1, 2004.

March 31, 2004: OPEC held its 130th meeting to review oil markets in Vienna, Austria. OPEC re-confirmed the new production ceiling of 23.5 million barrels per day effective April 1, 2004, which was agreed upon at the 129th Meeting held on February 10, 2004 in Algiers.

June 3, 2004: OPEC held its 131st meeting to review oil markets in Beirut, Lebanon. OPEC decided to increase its production quota to 25.5 million barrels per day effective July 1, 2004, and to 26.0 million barrels per day effective August 1, 2004.

September 15, 2004: OPEC held its 132nd meeting to review oil markets in Vienna, Austria. OPEC decided to increase its production quota to 27.0 million barrels per day effective November 1, 2004.

December 10, 2004: OPEC held its 133rd meeting to review oil markets in Cairo, Egypt, leaving OPEC output quotas unchanged. However, OPEC pledged to cut overproduction over quota levels by 1 million barrels per day effective January 1, 2005.

January 30, 2005: OPEC held its 134th meeting to review oil markets in Vienna, Austria, where it decided to leave its target production levels unchanged, and to temporarily suspend its price band mechanism.

March 16, 2005: OPEC held its 135th meeting to review oil markets in Isfahan, Iran, and decided to increase its production quota to 27.5 million barrels per day effective immediately.

June 15, 2005: OPEC held its 136th meeting to review oil markets in Vienna, Austria, and decided to increase its production quota to 28 million barrels per day effective July 1. OPEC authorized an additional 500,000 barrels per day increase in its quotas "should oil prices remain at current levels or continue to rise further." OPEC also decided to replace its previous OPEC reference basket of seven crude oils with a new one consisting of eleven crude streams, effective June 16.

September 19, 2005: OPEC will hold its 137th meeting to review oil markets in Vienna, Austria.