Cheating Behaviour among OPEC Member-States and Oil Price Fairness and Stability: An Empirical Analysis

Masud Ibrahim, Kamil Omoteso

Research output: Contribution to journalArticlepeer-review

Abstract

Within the context of a target oil price band regime, this paper posits that cheating behaviour in OPEC has ethical and accountability implications for the organisation. It also impacts on its reputation and ability to ensure stable and fair oil prices in the oil markets. Based on datasets covering the period from 2000 to 2012 (i.e. production quota era), analysed using the vector autoregression/vector error correction (VAR-VEC) framework, the study’s results indicate that OPEC cheating, mainly instigated by the amount of spare production capacity available to OPEC members, does not seem to have a significant direct effect on international oil prices. However, the degree of cheating by OPEC member-states might disrupt its ability to maintain surplus capacity enough to reduce price speculation in the oil markets. Should cheating behaviour in OPEC continue unabated, this could jeopardise an effective energy regulatory framework and market transparency. The paper, therefore, recommends a policy action in OPEC to support the redesigning of the existing quota system that is fair and just to its members and capable of controlling any cheating behaviour.
Original languageEnglish
Pages (from-to)(In-Press)
JournalInternational Journal of Global Energy Issues
Volume(In-Press)
Publication statusAccepted/In press - 4 Dec 2020

Bibliographical note

Dr. Ibrahim has held various teaching roles (since 2003) at different Universities both in the U.K. and abroad before joining Coventry University in February 2015. As a qualified chartered accountant, he has successfully prepared students for professional qualifications. Dr. Ibrahim is passionate about understanding the dynamic relationships between key players in the energy markets and how such interactions influence energy price formation and development of international accounting standards particularly for extractive/renewable industries. Other research areas include ethics, sustainability, smart cities and environmental accounting (including climate change), resource accountability, corruption in emerging economies and reputational management. He has supervised and examined PhD candidates in these areas, in addition to chairing about 20 PhD and MPhil Vivas. He has successfully managed external funds including British Academy - Newton Fund. He is the staff belonging lead for the school of economics, finance and accounting and also responsible for leading the school’s PG and UG projects/dissertations/research methods modules.

Keywords

  • OPEC cartel
  • Cheating
  • Oil prices
  • Fairness perceptions
  • Oil production
  • Oil policy

ASJC Scopus subject areas

  • Energy(all)
  • Business, Management and Accounting (miscellaneous)

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