account for discrepancies with respect to global demand, are also sourced from MOMR issues, as are OPEC and non-OPEC supply. However, to distinguish US shale production from more conventional US output, we refer to the Energy Information Administration (EIA, 2015). 35 For non-OPEC supply, capacity is assumed to equal actual output. For OPEC, sustainable capacity estimates are taken from the IEA (2013 , 2015, 2016). As mentioned earlier, non-OPECstatistics do not distinguish between crude and NGLs, but OPECstatistics do. We add NGLs to OPEC crude output
In November 2014, OPEC announced a new strategy geared towards improving its market share. Oil-market analysts interpreted this as an attempt to squeeze higher-cost producers including US shale oil out of the market. Over the next year, crude oil prices crashed, with large repercussions for the global economy. We present a simple equilibrium model that explains the fundamental market factors that can rationalize such a "regime switch" by OPEC. These include: (i) the growth of US shale oil production; (ii) the slowdown of global oil demand; (iii) reduced cohesiveness of the OPEC cartel; (iv) production ramp-ups in other non-OPEC countries. We show that these qualitative predictions are broadly consistent with oil market developments during 2014-15. The model is calibrated to oil market data; it predicts accommodation up to 2014 and a market-share strategy thereafter, and explains large oil-price swings as well as realistically high levels of OPEC output.
, Kim Massey , Erling Holmøy , Ingeborg Foldøy Solli and Birger Strøm , 2006 , “A Welfare State Funded by Nature and OPEC,” Statistics Norway Discussion Papers No. 464 , July 2006.
International Monetary Fund , 2005 , IMF Staff Country Report No. 05/196, of May 13, 2005 ( Washington: International Monetary Fund ).
Jafarov , Etibar and Kenji Moriyama , 2005 , “The Norwegian Government Petroleum Fund and the Dutch Disease,” in IMF Staff Country Report No. 05/197 ( Norway—Selected Issues ), of May 13, 2005, Chapter III
estimate structural revenue; Norway – spending rule; non-oil budget averages 3 percent of SWF; Russia—mechanism to reduce budget’s dependence on oil and gas revenues (abandoned after 2009 crisis until 2015); Timor-Leste—3 percent of fund + oil reserves transferred to budget; Nigeria—price-based fiscal rule; revenue above a predefined oil price is saved in fund.
4 OPECstatistics show that Angola was the largest oil producer in Africa and the 12 th largest in the world in 2016.
5 OPEC Annual Statistical bulletin 2017.
6 We use Sonangol’s current
Convergence, and Sustainable Fiscal Policy: the Case of Congo ,” forthcoming IMF Working Paper .
Fredriksen , Dennis and Nils Martin Stølen , 2005 , “ Effects of Demographic Development, Labour Supply and Pension Reforms On the Future Pension Burden ,” Statistics Norway Discussion Papers No. 418 , April 2005 .
Heide , Kim Massey , Erling Holmøy , Ingeborg Foldøy Solli and Birger Strøm , 2006 , “ A Welfare State Funded by Nature and OPEC ,” Statistics Norway Discussion Papers No. 464 , July 2006 .
International Monetary Fund
This Selected Issues paper analyzes core and idiosyncratic inflation in Norway. The paper provides estimates of underlying inflation, using a statistical technique to decompose inflation and a measure of core inflation into “common” and “idiosyncratic” components. It finds that overall inflation is not far from its underlying value, as estimated by the common component, while core inflation is below its underlying value. The paper also considers medium-term and long-term fiscal policy in light of high oil prices and the prospect of substantial increase in pension outlays.
This paper considers long-term fiscal policy options in Norway, the world's fifth largest oil exporter, in light of the substantial expected increase in pension outlays. It compares the current fiscal rule, which targets a (central government structural) non-oil deficit equal to 4 percent of Government Pension Fund assets, with three alternatives that save a larger share of oil revenue and accumulate more assets to pay for aging costs. It also analyzes the macroeconomic consequences of accumulating more assets, finding that the additional income generated from more assets allows lower tax rates, with positive effects on long-term output.
This Selected Issues paper examines tradeoffs and opportunities for oil revenues in Angola. Angola is facing a stark trade-off between declining oil fiscal revenues over the medium term and increasing social and public investment needs. Opportunities do exist to make the most of Angola’s remaining oil reserves, whilst reducing its debt burden and building fiscal buffers. However, a sound fiscal framework for the use of oil revenues that includes a well-designed fiscal stabilization fund may be needed. Under a more active fiscal rule, public investment can be scaled up gradually, while building fiscal buffers and insulating the non-oil economy from volatile oil price movements.