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The Price of Oil – Will it Start Rising Again?

Author

Listed:
  • Jean-Marc Fournier

    (OECD)

  • Isabell Koske

    (OECD)

  • Isabelle Wanner

    (OECD)

  • Vera Zipperer

    (OECD)

Abstract

Following a sharp drop amidst the global economic crisis and a subsequent recovery, the spot price of crude oil has been broadly stable for the past couple of years. This paper discusses the factors that drive oil demand and supply and, hence, the price of the resource. A set of oil demand equations is estimated for OECD and non-OECD countries, which is then combined with assumptions about the behaviour of supply to analyse the impact of a range of macroeconomic and policy scenarios on the future oil price path. The scenario analysis suggests that a return of world growth to slightly below pre-crisis rates would be consistent with an increase in the price of Brent crude to far above early-2012 levels by 2020. This increase would be mostly driven by higher demand from non-OECD economies – in particular China and India. The expected rise in the oil price is unlikely to be smooth. Sudden changes in the supply or demand of oil can have very large effects on the price in the short run. Le prix du pétrole – va-t-il recommencer à augmenter ? Après une forte baisse lors de la crise économique mondiale et une reprise ultérieure, le prix du pétrole brut est resté globalement stable depuis quelques années. Ce document examine les déterminants de la demande et de l?offre de pétrole et, par conséquent, du prix de cette ressource. Un ensemble d?équations de demande estimées pour les pays membres et non membres de l?OCDE est combiné à des hypothèses sur le comportement de l?offre pour analyser l?effet d?un éventail de scénarios macroéconomiques et politiques sur la tendance future du prix du pétrole. Cette analyse suggère que le retour de la croissance mondiale à un niveau légèrement inférieur au taux observé avant la crise pourraient entrainer le prix du baril de Brent d?ici 2020 bien au-dessus du niveau observé début 2012. Cette hausse principalement tirée par une demande soutenue des pays non membres de l?OCDE, notamment la Chine et l?Inde. Cette hausse du prix du pétrole a peu de chance d?être régulière. Des modifications soudaines de l?offre ou de la demande de pétrole peuvent avoir des effets importants sur les prix du pétrole à court terme.

Suggested Citation

  • Jean-Marc Fournier & Isabell Koske & Isabelle Wanner & Vera Zipperer, 2013. "The Price of Oil – Will it Start Rising Again?," OECD Economics Department Working Papers 1031, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1031-en
    DOI: 10.1787/5k49q186vxnp-en
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    References listed on IDEAS

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    Cited by:

    1. Bloch, Harry & Rafiq, Shuddhasattwa & Salim, Ruhul, 2015. "Economic growth with coal, oil and renewable energy consumption in China: Prospects for fuel substitution," Economic Modelling, Elsevier, vol. 44(C), pages 104-115.
    2. André de Palma & Alexandre Guimard, 2014. "Urbanism, an overview," Working Papers hal-00969574, HAL.
    3. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Policy Research Notes (PRNs) 94725, The World Bank.
    4. Daniel Santabárbara, 2017. "The oil market: recent developments and outlook," Economic Bulletin, Banco de España, issue SEP.
    5. Patrice Ollivaud & Cyrille Schwellnus, 2013. "The Post-crisis Narrowing of International Imbalances: Cyclical or Durable?," OECD Economics Department Working Papers 1062, OECD Publishing.
    6. Hayoung Park & Taewon Kang & Jeong-Dong Lee, 2019. "R&D Dynamics And Firm Growth: The Importance Of R&D Persistency In The Economic Crisis," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(05), pages 1-24, June.
    7. Cathrine Hagem & Halvor Briseid Storrøsten, 2019. "Supply‐ versus Demand‐Side Policies in the Presence of Carbon Leakage and the Green Paradox," Scandinavian Journal of Economics, Wiley Blackwell, vol. 121(1), pages 379-406, January.
    8. Taran Fæhn, Cathrine Hagem, Lars Lindholt, Ståle Mæland, and Knut Einar Rosendahl, 2017. "Climate policies in a fossil fuel producing country demand versus supply side policies," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    9. Daniel Santabárbara, 2017. "Evolución reciente y perspectivas del mercado de petróleo," Boletín Económico, Banco de España, issue SEP.
    10. Priyanshi Gupta & Anurag Goyal, 2015. "Impact of oil price fluctuations on Indian economy," OPEC Energy Review, Organization of the Petroleum Exporting Countries, vol. 39(2), pages 141-161, June.

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    More about this item

    Keywords

    demande de pétrole; oil and the macroeconomy; oil demand; oil price; oil price projection; prix du pétrole; projection du prix du pétrole; pétrole et macroéconomie;
    All these keywords.

    JEL classification:

    • 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
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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