Oil market structure, network effects and the choice of currency for oil invoicing

Elitza Mileva () and Nikolaus A Siegfried

No 77, Occasional Paper Series from European Central Bank

Abstract: A recurring theme in recent years in the debate on the international role of currencies has been the possiblity of pricing oil in euro. This paper contributes to these debates by providing a detailed review of the empirical evidence regarding the market for crude oil and current oil invoicing practices. It introduces a network effect model to identify the conditions under which a parallel invoicing in different currencies would be possible. The paper also includes a simulation designed to illustrate the dynamics of the currency choice of oil invoicing.

New Economics Papers: this item is included in nep-cba, nep-ene and nep-net
Date: 2007-12

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