The Effect of OPEC Production Allocations on Oil Prices

32 Pages Posted: 18 Aug 2008

See all articles by John L. Simpson

John L. Simpson

Curtin University - Centre for Research in Applied Economics

Date Written: August 16, 2008

Abstract

Production allocations are analysed in conjunction with an investigation of unlagged and optimally lagged relationships between key daily crude oil price series interacting with OPEC prices. It is found that structural breaks in the interacting series coincide with production allocations meetings which induce oil price increases. This implies cartel behaviour through collusive supply restriction. With crude oil prices at record highs, high inflation in developing countries and the onset of increased systemic risk in global financial markets, the major global players should well remember the impact of OPEC oil supply interference and cartel behaviour of the late 1980s early 1990s on global financial stability.

Keywords: production allocations, crude oil price series, OPEC, Non-OPEC, US, structural breaks, cointegration, causality, cartel behaviour

JEL Classification: Q41

Suggested Citation

Simpson, John L., The Effect of OPEC Production Allocations on Oil Prices (August 16, 2008). 21st Australasian Finance and Banking Conference 2008 Paper, Available at SSRN: https://ssrn.com/abstract=1231602 or http://dx.doi.org/10.2139/ssrn.1231602

John L. Simpson (Contact Author)

Curtin University - Centre for Research in Applied Economics ( email )

GPO Box U1987
Perth, Western Australia 6845
Australia

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