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Mr. Alberto Behar and Robert A Ritz

depends on demand and cost conditions as well as other non-OPEC players’ production capacities. It lends itself to quantitative empirical testing, which we pursue in Section 5. We stress that the optimality of the market-share strategy does not rely on a subsequent “harvesting” period with again-higher prices after the high-cost players have been squeezed out of the market. We thus obtain a further result on OPEC supply following a regime switch: Proposition 3 (i) Suppose that an increase in the capacity of player j , from K j ′ ≤ K ¯ j to K j ′ > K ¯ j

Jahangir Amuzegar

end of the century is expected to range between $45 and $72 (in 1980 dollars). 184 Need for Global Cooperation The precarious and delicate nature of the energy balance in the next two decades, the uncertainties surrounding the future of oil prices, OPEC supply, and substitutes, and the risks of continued world payments imbalances jointly bring the necessity of global cooperation into sharper focus. The manifest necessity of such cooperation, and the unnecessarily high cost of the chaos resulting from confrontation, relates to the stark realities of the

Mr. Alberto Behar and Robert A Ritz
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.
International Monetary Fund. Research Dept.

production costs are much higher than in the OPEC region ( Table 4.1 ). Despite lower and more expensive endowments, non-OPEC supply has grown steadily, though the price collapse of the mid-1980s combined with OPEC excess capacity slowed down growth. Most of the recent increases in non-OPEC production have been from the Commonwealth of Independent States (CIS) (see Figure 4.5 ). Many fields in the non-OPEC region are now mature and have high decline rates. Canada holds almost one-half of non-OPEC proven reserves in the form of non-conventional oil contained in its oil

Ms. Malika Pant, Mr. Martin Mühleisen, and Mr. Alun H. Thomas
Global oil markets were roiled by sharp price swings in 2008, and economists are still divided over the reasons for the unusual volatility. Those emphasizing fundamentals point to inelastic supply and demand curves, others view the phenomenon mostly as a result of financial investors flocking into commodity markets. This paper attempts to infer the strength of these competing hypotheses, using a simultaneous equation model that enables us to undertake a separate analysis of supply and demand factors. The model broadly captures both the surge and subsequent fall in prices, with a particularly strong impact of demand factors. The model captures a strong effect of a measure for global liquidity but does not find support for a speculative motive.
Ms. Malika Pant, Mr. Martin Mühleisen, and Mr. Alun H. Thomas

-6.21 0.000*** real oil price (in USD) -1.42 0.57 Δ real oil price (in USD) -6.05 0.000*** OECD demand margin -2.40 0.14 Δ OECD demand margin -3.03 0.03** OPEC supply margin -3.23 0.0183** inflation expectations -3.53 0.0072*** stock of non-commercial contracts -4.74 0.000*** nominal global liquidity 2.79 1.00 Δ nominal global liquidity -6.40 0.000*** real global liquidity 1.54 1.00 Δ real global liquidity -8.77 0.000*** emerging markets oil imports