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Analysis of Saudi Arabia's behavior within OPEC and the world oil market


  • Alkhathlan, Khalid
  • Gately, Dermot
  • Javid, Muhammad


We analyze oil export behavior by Saudi Arabia and the Rest of OPEC since 1973. In the literature there has been a wide range of estimates of their correlation: from positive, to zero, to negative. We find that the correlation has varied over time, from moderately high (0.7) in normal periods, to negative during each of five interruptions; the average correlation has been 0.19. Saudi Arabia's oil market behavior depends upon circumstances, but its primary goal is the stability of OPEC and the world oil market. It will coordinate export reductions with the Rest of OPEC when faced with declining demand, but it will increase exports when faced with interruptions elsewhere in OPEC. Allowing for such differences provides evidence of intelligent, context-dependent consistency. But ignoring context – by wrongly assuming the same Saudi response in Normal periods and Interruptions – can lead to a conclusion of Saudi “inconsistency” because the difference in the responses has been obscured.

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  • Alkhathlan, Khalid & Gately, Dermot & Javid, Muhammad, 2014. "Analysis of Saudi Arabia's behavior within OPEC and the world oil market," Energy Policy, Elsevier, vol. 64(C), pages 209-225.
  • Handle: RePEc:eee:enepol:v:64:y:2014:i:c:p:209-225 DOI: 10.1016/j.enpol.2013.09.030

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    Cited by:

    1. Aune, Finn Roar & Grimsrud, Kristine & Lindholt, Lars & Rosendahl, Knut Einar & Storrøsten, Halvor Briseid, 2017. "Oil consumption subsidy removal in OPEC and other Non-OECD countries: Oil market impacts and welfare effects," Energy Economics, Elsevier, vol. 68(C), pages 395-409.
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    3. repec:eee:enepol:v:111:y:2017:i:c:p:166-178 is not listed on IDEAS
    4. Ansari, Dawud, 2017. "OPEC, Saudi Arabia, and the shale revolution: Insights from equilibrium modelling and oil politics," Energy Policy, Elsevier, vol. 111(C), pages 166-178.
    5. Ratti, Ronald A. & Vespignani, Joaquin L., 2015. "OPEC and non-OPEC oil production and the global economy," Energy Economics, Elsevier, vol. 50(C), pages 364-378.
    6. Pål Boug & Ådne Cappelen & Anders Rygh Swensen, 2016. "Modelling OPEC behaviour. Theory and evidence," Discussion Papers 843, Statistics Norway, Research Department.
    7. Chul-Yong Lee & Sung-Yoon Huh, 2017. "Forecasting Long-Term Crude Oil Prices Using a Bayesian Model with Informative Priors," Sustainability, MDPI, Open Access Journal, vol. 9(2), pages 1-15, January.
    8. Lin, Boqiang & Omoju, Oluwasola E. & Okonkwo, Jennifer U., 2015. "Will disruptions in OPEC oil supply have permanent impact on the global oil market?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1312-1321.

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    OPEC oil production; Oil exports; Saudi Arabia;


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