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An Updated Assessment of Oil Market Disruption Risks

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  • Beccue, Phillip
  • Huntington, Hillard

Abstract

The probability of the size and duration of another oil disruption is critical to estimating the value of any policies for reducing the economic damages from a sudden oil supply disruption. The Energy Modeling Forum at Stanford University developed a risk assessment framework and evaluated the likelihood of one or more foreign oil disruptions over the next ten years. The risk assessment was conducted through a series of two workshops attended by leading geopolitical, military and oil-market experts who provided their expertise on the probability of different events occurring, and their corresponding link to major disruptions in key oil market regions. The study evaluated 5 primary regions of production: Saudi Arabia, Other Persian Gulf, Africa, Latin America, and Russian / Caspian States. The final results of the risk assessment convey a range of insights across the three dimensions of magnitude, likelihood, and length of a disruption. These conclusions are net of offsets (e.g., OPEC spare capacity), with the notable exception that the SPR is not included as a source of offsets. At least once during the 10-year time frame (2016-2025), the probability of a net (of offsets) disruption of 2 MMBD (million barrels per day) or more lasting at least 1 month is approximately 80%.

Suggested Citation

  • Beccue, Phillip & Huntington, Hillard, 2016. "An Updated Assessment of Oil Market Disruption Risks," MPRA Paper 74986, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:74986
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    Cited by:

    1. Zhang, Lei, 2024. "A comparative study of strategic petroleum reserve policies of major countries in the world," Energy Policy, Elsevier, vol. 195(C).
    2. Dulal Halder & Anshuman Gupta, 2019. "Overseas equity oil development for augmenting energy security: Study of the critical factors in Indian context," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 75-97.
    3. Liu, Zhen & Tang, Yuk Ming & Chau, Ka Yin & Chien, Fengsheng & Iqbal, Wasim & Sadiq, Muhammad, 2021. "Incorporating strategic petroleum reserve and welfare losses: A way forward for the policy development of crude oil resources in South Asia," Resources Policy, Elsevier, vol. 74(C).
    4. Ali Raza & Maryam Khokhar & Reyna Esperanza Zea Gordillo & Faisal Ejaz & Tahir Saeed Jagirani & Fodor Zita Júlia & Md Billal Hossain, 2024. "Economic Gains and Losses for Sustainable Policy Development of Crude Oil Resources: A Historical Perspective of Indian Subcontinent," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 642-655, March.
    5. Beccue, Phillip C. & Huntington, Hillard G. & Leiby, Paul N. & Vincent, Kenneth R., 2018. "An updated assessment of oil market disruption risks," Energy Policy, Elsevier, vol. 115(C), pages 456-469.
    6. Yuan, Meng & Zhang, Haoran & Wang, Bohong & Huang, Liqiao & Fang, Kai & Liang, Yongtu, 2020. "Downstream oil supply security in China: Policy implications from quantifying the impact of oil import disruption," Energy Policy, Elsevier, vol. 136(C).
    7. Brown, Stephen P.A. & Huntington, Hillard G., 2017. "OPEC and world oil security," Energy Policy, Elsevier, vol. 108(C), pages 512-523.
    8. Chen, Sai & Ding, Yueting & Zhang, Yanfang & Zhang, Ming & Nie, Rui, 2022. "Study on the robustness of China's oil import network," Energy, Elsevier, vol. 239(PB).
    9. Chen, Hao & Zhang, Wenfeng & Huang, Xiangting & Wang, Xin, 2024. "Estimating the dynamic economic impacts of oil supply disruptions on China: A case study of Malacca Strait block," Resources Policy, Elsevier, vol. 98(C).
    10. Mu Li & Li Li & Wadim Strielkowski, 2019. "The Impact of Urbanization and Industrialization on Energy Security: A Case Study of China," Energies, MDPI, vol. 12(11), pages 1-22, June.
    11. Chen, Sai & Zhang, Ming & Ding, Yueting & Nie, Rui, 2020. "Resilience of China's oil import system under external shocks: A system dynamics simulation analysis," Energy Policy, Elsevier, vol. 146(C).

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    JEL classification:

    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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