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DIW Economic Bulletin

51/52 / 2017 Crude Oil: Market Trends and Simulations Point toward Stable Equilibrium Aleksandar Zaklan, Dawud Ansari, Claudia Kemfert S. 567-573

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Abstract:

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.

JEL-Classification:

C63;Q31;Q35;Q41;Q43

Keywords:

Crude oil markets, equilibrium modeling, shale oil, tight oil, OPEC