Power of Supplier: There are two majorsectors in Oil Industry, Upstream sector and downstream sector, as the power ofsupplier is the main topic in this part of research so all the focus will be onthe upstream sector, which includes the explorationand production of oil and gas. Asshown below the stages of extracting Oil and Gas.
The types of suppliercompanies: 1. Oil Drilling and Services2. Oilfield Services3.
Oil Refining Supplier and the bargainingPower: Suppliershave a greater bargainingpower when the market is well organized and there are not many substitutesavailable. The bargaining power of Suppliers in the Oil industry is high. Themajor suppliers are the countries that have Oil and Gas reserve (always calledthe producing Oil and Gas Countries). The main Oil and Gas provider are theOPECS countries.OPEC (Organization of the Petroleum ExportingCountries, established in 1960 in Baghdad and the headquarter in Vienna since1965, the OPECS has 14 members, (six in the middle east countries) (six inAfrica) and two in America, which counted for estimated 44 percent of global Oil Production and73 percent of the worlds proven oil reserves, find herebelow a table shows the member countries in OPEC with their share in producingOil during 2016. Coming into main goals and reasons for establishing OPEC,OPEC’s stated that the mainmission is “to coordinate and unify the petroleum policies of its membercountries and ensure the stabilization of oil markets, in order to secure anefficient, economic and regular supply of petroleum to consumers, a steadyincome to producers, and a fair return on capital for those investing in thepetroleum industry.” And this mission enable OPEC to play a very importantrole in specifying the amount of Supplied oil and Gas to the market, which isdirectly connected to the prices of the oil, which lead us to realize that the fluctuationon the Oil prices and Gas in the market theoretical depends on the demand andsupplyFrankly speakingthe demand usually does not change, but the supply is fluctuating based on theamount specified by OPEC.
This is could be noticed when the OPEC announces ameeting to specify the supply amount forthe next period or month, after sometimes before the meeting or prices arestarting to fluctuate. To conclude, OPECpossess a significant bargaining power in the oil and Gas industry, byinfluencing the amount of supply to the market which directly affects theprices of the Oil and the Gas to the end costumers. Another important factorwhich not always easy to predict, but highly influences the Prices and thesupply of the oil is the politics, this was witnessed through the last years(such as wars, changes in thegovernmental politics strategy).