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Pandemic, Ukraine, OPEC+ and strategic stockpiles: Taming the oil market in turbulent times

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  • Almutairi, Hossa
  • Pierru, Axel
  • Smith, James L.

Abstract

With a simple decomposition method, we estimate the monthly shifts in global oil demand and non-OPEC+ supply that have occurred since 2010. We find evidence that during the Jan 2017- Sep 2024 period OPEC+ attempted to stabilize the price of crude oil much below the values assessed by market observers. Using a structural model of OPEC+’s behavior, we find that judgmental errors regarding the size of market shocks that OPEC+ attempted to offset significantly increased after the start of the Pandemic due to the unprecedented nature and size of those shocks. Despite this, without OPEC+’s actions the price volatility would have been much higher than actual, nearly doubled during the Pre-Pandemic period (Jan 2017-Feb 2020), and higher by 86 % during the Pandemic (May 2020 – Jan 2022) and by 50 % during the Ukraine War (Feb 2022 – Sept 2024). Our results provide evidence that actions taken by consuming countries during the Ukraine War, such as coordinated releases from national stockpiles of crude oil, contributed to reduce price volatility by at least 20 % (2.4 percentage points), a factor that OPEC+ appears to have factored into its production plans.

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  • Almutairi, Hossa & Pierru, Axel & Smith, James L., 2025. "Pandemic, Ukraine, OPEC+ and strategic stockpiles: Taming the oil market in turbulent times," Energy Economics, Elsevier, vol. 144(C).
    • Handle: RePEc:eee:eneeco:v:144:y:2025:i:c:s0140988325001422
    DOI: 10.1016/j.eneco.2025.108319
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    1. Junlian Gong & Jun Nagayasu, 2025. "What Makes the Oil Pricing Center? The Impact of Futures Markets and Production," TUPD Discussion Papers 71, Graduate School of Economics and Management, Tohoku University.

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