OPEC Basket

The OPEC Basket, or OPEC Reference Basket, is a weighted average of prices of just over a dozen OPEC-produced crude oil blends. It exists in large part to help us track inflation, since energy is such a big part of the world's expenditures.

The basket holds a variety of crudes: light (preferable) and heavy, sweet (preferable) and sulphury, from Algeria and Angola, Iran and Iraq, Qatar and UAE, and other OPEC countries. Since this is a wide-variety basket, it’s usually priced lower than some other popular crude oil indices (looking at you, West Texas Intermediate and North Sea Brent), which are light and sweet—higher quality crude oil.

Since OPEC, the Organization of the Petroleum Exporting Countries controls so much of the world’s oil supply that it's no surprise the OPEC Basket functions as both a benchmark for global oil prices and reference for how the global oil industry’s been doing.

The OPEC Basket reflects OPEC’s control of their oil supply. They restrict supply when prices get uncomfortably low, and loosen up that restriction when prices are high. By keeping crude oil prices within an upper and lower bound, OPEC countries are not only protecting their own, but also holding the oil market at stable levels for the global market artificially (well, they try, sometimes).

As the world starts to run out of liquid dino-bones, all eyes will be on the OPEC Basket. But for now, the OPEC Basket is best suited for those in the market of oil futures and derivatives, though oil prices affect almost everybody and everything...as long as it’s fueling our cars and many of our factories.