what is the opec basket 
the opec basket is a weighted average of oil prices from the different opec members around the world members of the organization of the petroleum exporting countries opec contribute data that forms the basis of the basket the basket is a benchmark or reference point for those monitoring the oil price and the stability of the global oil market the opec basket is also known as the opec reference basket orb or the opec reference basket of crude understanding the opec basketthe opec basket depends on specific petroleum blends from opec member countries and is a weighted average a weighted average is a mean calculated by giving values to data influenced according to some attribute in the case of the opec basket the defining characteristic is the weight of the crude oil as of december 2020 the opec basket averaged the prices of crude oils from thirteen member states 1 they included saharan blend from algeria girassol from angola djeno from congo zafiro from equatorial guinea and rabi light from gabon iran heavy basra light from iraq kuwait export and es sider from libya were also part of the basket bonny light from nigeria arab light from saudi arabia murban from the united arab emirates and merey from venezuela round out the list some of the opec oils have higher sulfur content than crude oils from other countries hydrocarbons or crude oil that have higher sulfur contents are more expensive to refine because of that the price of the opec basket is generally lower than other oil reference prices crude oil with excessive impurities is unsuitable for many uses unless it is extensively processed many other countries throughout the world also produce oil however they are not opec members russia the united states china and canada are all major oil producers but not opec members opec s member countries produce a substantial fraction of the world s oil oil prices matter a great deal to the global economy because the production and distribution of all consumer goods depend on petroleum oil fuels the trucks that transport goods the tractors that plow agricultural fields the cars that consumers use to get to the market and much more opec provides a way for the member oil producing countries to create stable market conditions for themselves by raising or lowering production the opec basket vs other crude oil benchmarksthere are many different crude oil benchmarks representing more than 200 varieties of crude oil they vary substantially in both price and overall quality some of the leading alternatives to the opec basket include benefits of the opec basketthe main use of the opec basket is setting and achieving opec price targets whenever people hear news stories about opec raising oil prices the price they are hearing about is the opec basket price there is a substantial competition between various crude oils because most of them are relatively close substitutes however the direct goal of opec members is to raise the price that they receive for their own oil in the global market since the opec basket is a weighted average of opec members oil prices it is ideal for setting the organization s goals and measuring its success criticism of the opec basketsince it is just an average the opec basket is not a type of unrefined oil that businesses can buy directly instead they must buy some particular oil such as kuwait export or arab light these crude oils vary in price and quality so the opec basket is not very useful for oil refineries real world example of the opec basketon april 26 2018 the opec basket stood at 71 per barrel this price represents a steady rise over the previous month on march 26 2018 the orb was 66 80 a year before it stood at about 51 47 and rose steadily throughout 2017 