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Recent Oil Price Movements: Forces and Policy Issues

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  • Eckhard Wurzel
  • Luke Willard
  • Patrice Ollivaud

Abstract

Crude oil prices have trended up since the end of the 1990s, peaking at a historic high in mid-2008 that was followed by a steep price correction with a subsequent rebound. This paper considers major forces behind the evolution of the oil price, using a simple model of supply and demand elasticities as a benchmark, highlights implications for inflation and economic activity and draws some conclusions for macroeconomic policy. The analysis suggests that the run-up in crude oil prices since 2003 was due to both vigorous oil demand growth by emerging markets and, from the middle of the decade onward, a weaker than expected oil supply response to rising prices. Prices are unlikely to fall back to levels seen in the first years of the decade either over the short or medium term. Évolution récente du prix du pétrole : Facteurs explicatifs et questions de politiques économiques Les prix du pétrole brut ont crû régulièrement depuis la fin des années 90, jusqu’à atteindre un plus haut historique à la mi-2008 et ont ensuite été suivi par une baisse significative puis un nouveau rebond. Ce document met en exergue les forces principales derrière cette évolution des prix du pétrole en utilisant comme référence un modèle simple d’élasticités de l’offre et de la demande. Ensuite sont mis en évidence les implications pour l’inflation et l’activité économique. Enfin des conclusions sont tirées pour la politique macroéconomique. L’analyse suggère que l’augmentation des prix du pétrole depuis 2003 provient à la fois d’une croissance dynamique de la demande de pétrole en provenance des marchés émergents, et depuis la seconde moitié de la décennie d’une réaction plus faible que prévue de l’offre de pétrole face à des prix en hausse. Il est peu probable que les prix retombent à des niveaux prévalant les premières années de cette décennie que ce soit dans le court ou le moyen terme.

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File URL: http://dx.doi.org/10.1787/220061071212
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 737.

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Date of creation: 04 Dec 2009
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Handle: RePEc:oec:ecoaaa:737-en

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Keywords: crude oil price; macroeconomic issues; oil demand; oil supply; prix du pétrole brut; demande de pétrole; offre de pétrole; questions macroéconomiques;

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