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

Masud Ibrahim; Kamil Omoteso

doi:10.1504/IJGEI.2022.120775

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

Masud Ibrahim
, Kamil Omoteso

University of Derby

Research output: Contribution to journal › Article › peer-review

2 Citations (Scopus)

901 Downloads (Pure)

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 language	English
Pages (from-to)	98-119
Number of pages	22
Journal	International Journal of Global Energy Issues
Volume	44
Issue number	1
Early online date	3 Feb 2022
DOIs	https://doi.org/10.1504/IJGEI.2022.120775
Publication status	Published - 2022

Bibliographical note

Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.

This document is the author’s post-print version, incorporating any revisions agreed during the peer-review process. Some differences between the published version and this version may remain and you are advised to consult the published version if you wish to cite from it.

Keywords

OPEC cartel
Cheating
Oil prices
Fairness perceptions
Oil production
Oil policy

ASJC Scopus subject areas

General Energy
Business, Management and Accounting (miscellaneous)

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Cite this

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

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{\textquoteright}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. ",

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

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

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