Economic Models of OPEC Behaviour and the Role of Saudi Arabia

Nourah Al-Yousef
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Nourah Al-Yousef: Surrey Energy Economics Centre (SEEC), Department of Economics, University of Surrey

No 94, Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) from Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey

Abstract: Previous studies of OPEC have suggested ways of explaining the behaviour of OPEC as a group. The specific role of Saudi Arabia in the market and within OPEC has received attention from some authors. This study analyses the role of Saudi Arabia in these models and tries to find how much they explain the role of Saudi Arabia in the period from 1973 to the present. Models of OPEC behaviour are divided into four sets. The first set of models does not address the role of Saudi Arabia; they include monolithic cartel models and competitive models. The second set examines the role of Saudi Arabia in the oil markets; they include the different group models and the swing producer model. Then we discuss other theories of OPEC behaviour that may apply to Saudi Arabia, namely the target capacity utilisation model, the fiscal constraint model and the property right model. This is followed by a political interpretation of Saudi Arabia’s behaviour in the world oil market. Since Saudi Arabia is a major producer of oil it is likely to use its production and pricing policies to achieve certain objectives. These objectives are discussed in the light of each model and compared with expected oil policy.

Pages: 56 pages
Date: 1998-06
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Citations: View citations in EconPapers (3)

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