ECN publication
Olie heeft zijn Prijs
Hers, J.S.; Touber, F.
Published by: Publication date:
ECN Policy Studies 14-9-2007
ECN report number: Document type:
ECN-E--07-040 ECN publication
Number of pages: Full text:
96 Download PDF  

As the relevance of the oil price has been recognised since the early seventies of the last century one would expect that both monitoring and modelling practice of the international oil industry would be well developed and effective. The recent developments on the international oil market seem to have come as a surprise to many sector analysts however. This report seeks to review the structure of the international oil market in order to identify relevant drivers and internal dynamics of the international oil market. In addition several modelling approaches, as undertaken by institutions in this field, have been reviewed on the basis of this narrative and qualitative analysis. The analysis of the international oil market suggests that the role of OPEC policies has gained increasing importance, both due to the increasing dependence on OPEC production and increas-ing coherence of OPEC decision making. None of the models surveyed structures the interna-tional oil market as an oligopolistic or cartel-driven market however, but rather as a competitive market with OPEC either as a price-following or a price-setting marginal producer. The first ap-proach seems adequate for the simulation of the international market structure over the nineties of the past century but seems problematic for the current and future term. The second approach reflects the recent trend of increasing OPEC pricing power but fails to present a transparent logic on the price-setting strategy of OPEC. On the basis of these notions it is suggested that fu-ture modelling practice should embed game theoretic considerations regarding the strategic be-haviour of the large oil producers.

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