The performance of the cartel between 2001 and 2014 – three years before the advent of OPEC + as opposed to OPEC only, was still robust, reducing oil volatility by up to 50% and at least 25%. By further quantifying the group’s actions, the study found that OPEC’s efforts have resulted in an average annual increase of $ 175 billion in global GDP.
Per country, these economic benefits are distributed $ 39.4 billion in the United States, $ 30.9 billion in China, $ 59.4 billion in the European Union and $ 45.6 billion everywhere else.
Our counterfactual analysis based on monthly data indicates that OPEC, in general, and Saudi Arabia in particular, has succeeded to a limited but significant extent in its attempt to use unused capacity to offset shocks and stabilize the price. oil, “says the report. partly reads.
The study went beyond quantifying the performance of OPEC + over the years. He also detailed the inelasticity of oil demand, which requires large price movements to close the small market gaps between supply and demand.
The report finds that shale oil has a “limited impact” on the elasticity of demand for OPEC oil because it is such a small fraction of the non-OPEC supply.
“Therefore, the development of shale oil has not significantly reduced the value of OPEC buffer. Our results show that OPEC’s unused capacity, as an institutional mechanism, plays an essential role in the smooth functioning of the oil market for the benefit of the world economy. ”
By Julianne Geiger for Oilprice.com
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