Financial market pressure, tacit collusion and oil price formation

Finn Roar Aune (), Klaus Mohn, Petter Osmundsen and Knut Einar Rosendahl

Energy Economics, 2010, vol. 32, issue 2, 389-398

Abstract: We explore a hypothesis that a change in investment behaviour among international oil companies (IOC) towards the end of the 1990s had long-lived effects on OPEC strategies, and on oil price formation. Coordinated investment constraints were imposed on the IOCs through financial market pressures for improved short-term profitability in the wake of the Asian economic crisis. A partial equilibrium model for the global oil market is applied to compare the effects of these tacitly collusive capital constraints on oil supply with an alternative characterised by industrial stability. Our results suggest that even temporary economic and financial shocks may have a long-term impact on oil price formation.

Keywords: Investment; behaviour; Market; power; Oil; market; Tacit; collusion (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

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Working Paper: Financial market pressures, tacit collusion and oil price formation (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:32:y:2010:i:2:p:389-398

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