{"title":"Managing the oil market under misinformation: A reasonable quest?","authors":"Hossa Almutairi , Axel Pierru , James L. Smith","doi":"10.1016/j.jcomm.2024.100403","DOIUrl":null,"url":null,"abstract":"<div><p>We examine the type and quality of information OPEC needs to successfully stabilize the oil market. Our analysis considers the impact of observational errors regarding market shocks as well as erroneous judgments of demand and supply elasticities. Actual prices resulting from OPEC's historical efforts to dampen volatility are compared to counterfactual prices that would have prevailed had OPEC remained passive. Despite the potentially confounding effect of misinformation, the elevated counterfactuals indicate that OPEC has managed to substantially decrease price volatility. Indeed, during the 2017–2021 OPEC+ period we estimate price volatility would have been up to 100% greater than actual without the actions of OPEC and its allies.</p></div>","PeriodicalId":45111,"journal":{"name":"Journal of Commodity Markets","volume":null,"pages":null},"PeriodicalIF":3.7000,"publicationDate":"2024-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S2405851324000229/pdfft?md5=cf86b537882a1397c387c65720379a65&pid=1-s2.0-S2405851324000229-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Commodity Markets","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S2405851324000229","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
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Abstract
We examine the type and quality of information OPEC needs to successfully stabilize the oil market. Our analysis considers the impact of observational errors regarding market shocks as well as erroneous judgments of demand and supply elasticities. Actual prices resulting from OPEC's historical efforts to dampen volatility are compared to counterfactual prices that would have prevailed had OPEC remained passive. Despite the potentially confounding effect of misinformation, the elevated counterfactuals indicate that OPEC has managed to substantially decrease price volatility. Indeed, during the 2017–2021 OPEC+ period we estimate price volatility would have been up to 100% greater than actual without the actions of OPEC and its allies.
期刊介绍：
The purpose of the journal is also to stimulate international dialog among academics, industry participants, traders, investors, and policymakers with mutual interests in commodity markets. The mandate for the journal is to present ongoing work within commodity economics and finance. Topics can be related to financialization of commodity markets; pricing, hedging, and risk analysis of commodity derivatives; risk premia in commodity markets; real option analysis for commodity project investment and production; portfolio allocation including commodities; forecasting in commodity markets; corporate finance for commodity-exposed corporations; econometric/statistical analysis of commodity markets; organization of commodity markets; regulation of commodity markets; local and global commodity trading; and commodity supply chains. Commodity markets in this context are energy markets (including renewables), metal markets, mineral markets, agricultural markets, livestock and fish markets, markets for weather derivatives, emission markets, shipping markets, water, and related markets. This interdisciplinary and trans-disciplinary journal will cover all commodity markets and is thus relevant for a broad audience. Commodity markets are not only of academic interest but also highly relevant for many practitioners, including asset managers, industrial managers, investment bankers, risk managers, and also policymakers in governments, central banks, and supranational institutions.
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