Facebook LinkedIn Youtube Twitter

IAEE Members and subscribers to The Energy Journal: Please log in to access the full text article or receive discounted pricing for this article.

The Impact of an Oil Market Disruption on the Price of Oil: A Sensitivity Analysis

This paper provides a quantitative analysis of the change in the price of oil due to an exogenous change in the supply of oil. It first outlines the role of oil in large-scale econometric models and reviews the theory upon which the oil/energy sectors in these models are based. It then presents a small reduced form of the large-scale econometric model and discusses the model's key parameters. The model is solved in order to determine the price of oil in the event of an oil supply disruption. The paper then discusses the sensitivity of the price effects of an oil market disruption to changes in the model's parameters and compares this range of price estimates to the three major supply disruptions of the past two decades.

Purchase ( $25 )

Energy Specializations: Petroleum – Markets and Prices for Crude Oil and Products; Energy Security and Geopolitics – Geopolitics of Energy

JEL Codes: Q41: Energy: Demand and Supply; Prices, Q43: Energy and the Macroeconomy, Q02: Commodity Markets, Q38: Nonrenewable Resources and Conservation: Government Policy, Q37: Nonrenewable Resources and Conservation: Issues in International Trade

Keywords: Oil prices, Gulf war, Oil market model, Market disruption

DOI: 10.5547/ISSN0195-6574-EJ-Vol12-No4-7

Published in Volume 12, Number 4 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.