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Crude Oil: Market Trends and Simulations Point toward Stable Equilibrium

DIW Weekly Report 51/52 / 2017, S. 567-573

Aleksandar Zaklan, Dawud Ansari, Claudia Kemfert

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In this study, we report on the current state of the international market for crude oil. The market data we analyzed indicate that competition has intensified as a result of the now firmly-established shale oil extraction industry in the U.S. Model-based simulations also show that supply-side shifts should only have moderate price effects. This applies to both an expansion in U.S. shale oil production and a disruption of production in OPEC countries. Market data and simulations indicate that the crude oil market is currently in a new equilibrium that appears to be relatively robust in the short term. In the absence of further shocks, we can continue to expect a moderate price level for crude oil in the short term with corresponding implications for economic and climate policy.

Dawud Ansari

Visiting scholar in the Energy, Transportation, Environment Department

Aleksandar Zaklan

Research Associate in the Energy, Transportation, Environment Department

Claudia Kemfert

Head of Department in the Energy, Transportation, Environment Department

JEL-Classification: C63;Q31;Q35;Q41;Q43
Keywords: Crude oil markets, equilibrium modeling, shale oil, tight oil, OPEC
Frei zugängliche Version: (econstor)