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Crude Oil: Market Trends and Simulations Point toward Stable Equilibrium

Author

Listed:
  • Aleksandar Zaklan
  • Dawud Ansari
  • Claudia Kemfert

Abstract

In this study, we report on the current state of the international market for crude oil. The market data we analyzed indicate that competition has intensified as a result of the now firmly-established shale oil extraction industry in the U.S. Model-based simulations also show that supply-side shifts should only have moderate price effects. This applies to both an expansion in U.S. shale oil production and a disruption of production in OPEC countries. Market data and simulations indicate that the crude oil market is currently in a new equilibrium that appears to be relatively robust in the short term. In the absence of further shocks, we can continue to expect a moderate price level for crude oil in the short term with corresponding implications for economic and climate policy.

Suggested Citation

  • Aleksandar Zaklan & Dawud Ansari & Claudia Kemfert, 2017. "Crude Oil: Market Trends and Simulations Point toward Stable Equilibrium," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 7(51/52), pages 567-573.
  • Handle: RePEc:diw:diwdeb:2017-51-2
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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.574013.de/diw_econ_bull_2017-51-2.pdf
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    More about this item

    Keywords

    Crude oil markets; equilibrium modeling; shale oil; tight oil; OPEC;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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