The Evolution of Oil Prices and the Role Played by OPEC+
Petre Prisecaru ()
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Petre Prisecaru: European Studies Center, Institute for World Economy, Romanian Academy
Global Economic Observer, 2021, vol. 9, issue 1, 100-106
After the two oil shocks of the 1970s when OPEC was able to strongly increase the prices at the expense of economic recessions, a collapse followed in 1986, the so called oil counter-shock, due to the disagreements within OPEC and the decisions taken by Saudi Arabia to strongly increase oil supply. After that the prices fluctuated under $ 50/barrel and the periods of declining prices were more numerous than those of the boom, but each boom created the conditions for a subsequent fall in prices. The oil’s price volatility has increased dramatically in the last two decades, and in late 2016 a larger alliance/group OPEC+ was formed between OPEC and some non OPEC countries (13). OPEC + is an alliance of 13 OPEC members and 13 non-OPEC members, which together control over 50% of the world's crude oil supply and hold about 90% of certain oil reserves. OPEC+ alliance, based on close cooperation between Saudi Arabia and Russia, was able to reach an agreement in April 2020 and to cut oil supply by 10 million barrels/day and to extend the agreement in 2020 and in 2021, to stabilize the market and increase the prices, also with the support of other producers, such as the USA, Canada, but mainly due to the recovery of consumer demand in developed countries. In view of all those mentioned evolution my article aims to assess OPEC+ role in assuring the stability of oil prices while maintaining a balanced growth for the total global production.
Keywords: price volatility; boom; supply; demand; OPEC+ cooperation; agreement (search for similar items in EconPapers)
JEL-codes: Q31 Q35 Q41 Q42 (search for similar items in EconPapers)
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