OPEC+ efforts to stabilize the market reduced crude oil price volatility by 50% January 2017 and August 2021

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Saudi Arabia

OPEC+ efforts to stabilize the market reduced crude oil price volatility by 50% January 2017 and August 2021

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OPEC+’s management of spare capacity decreased the average price over the pre-pandemic period, but by countering the price collapse caused by the pandemic demand shock, lifted the average price by $35.70 from May 2020 through August 2021.

The period covered by the study ends in August 2021, but the authors believe that OPEC+’s market stabilization efforts have consistently continued until now.

Riyadh: OPEC+’s management of its spare capacity reduced crude oil price volatility by up to 50%, both before and during the COVID-19 pandemic, according to a new study published by experts from King Abdullah Petroleum Studies and Research Center (KAPSARC) in the Energy Journal. This reduction in oil price volatility lowered the macroeconomic costs of adjustment to the pandemic and contributed to higher social welfare.

The study “Oil Market Stabilization: The Performance of OPEC and Its Allies” further highlights that, OPEC+’s market-stabilization efforts appear to have lifted the average price from $18 to $54 during the pandemic demand shock, but to have decreased the average price before the pandemic by $2.50.

The study develops an economic model that calculates the crude oil price that would have prevailed if OPEC+ had not attempted to stabilize the oil market using its spare capacity. The resulting

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