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Heterogeneous noncompliance with OPEC's oil production cuts

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  • Parnes, Dror

Abstract

In this study we explore the heterogeneous noncompliance behavior among ten member nations of the Organization of the Petroleum Countries (OPEC). Overall we find that the three top-oil-producers (Saudi Arabia, Iran, and Venezuela) and the four relatively low-oil-producers (Libya, Indonesia, Algeria, and Qatar) exhibit higher cheating frequencies and magnitudes, while they tend to offset their peers' conduct. Conversely, the three mid-oil-producers (UAE, Nigeria, and Kuwait) display much lower frequencies and magnitudes of noncompliance with OPEC's administered quotas, while they largely demonstrate herding behavior among their peers. The volatilities of the respective cheating magnitudes are rather similar across the three clusters though. This study contributes to the economic literature by further illuminating the operational mode of OPEC, and by exposing its three main subsets, its interdependent structure, and its members' customary behavioral patterns.

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  • Parnes, Dror, 2019. "Heterogeneous noncompliance with OPEC's oil production cuts," Energy Economics, Elsevier, vol. 78(C), pages 289-300.
    • Handle: RePEc:eee:eneeco:v:78:y:2019:i:c:p:289-300
    DOI: 10.1016/j.eneco.2018.11.023
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    More about this item

    Keywords

    OPEC; Oil production cuts; Heterogeneous noncompliance; Interdependency;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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