Analysis of OPEC’s Monopoly in Crude Oil Market

This article briefly and historically reviews the polices of the Organization of Petroleum Exporting Countries (OPEC) and analyzes the factors that facilitate or hinder OPEC’s monopoly in the crude oil market. The industrial concentration ratio is chosen to measure OPEC’s monopoly power based on the data from 1986 to 2004. It is concluded that OPEC possesses a long-standing cartel foundation and a rather strong monopoly in the world crude oil market. At the same time, there are unstable factors that influence and even weaken OPEC’s monopoly.     

OPEC nears production capacity

At first sight, OPEC appears to have a great deal of spare production capacity: over 5 mn bpd in all. On further examination, it is clear that most of this consists either of heavy crude oil for which there is little or no market under present conditions, or of capacity that is shut-in by violence and civil unrest. OPEC's effective spare production capacity is probably less than 1 mn bpd, which may account for its recent decision not to increase output during the second and third quarters of the year. It also makes it unlikely that OPEC will have much additional oil to offer already tight markets as demand undergoes its normal seasonal rise at the end of the year.     

OPEC quotas unchanged, Nigeria won't sell crude and Iran can't

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices approached record levels as fears grew of a cut in production by OPEC. Partly in response to such fears, OPEC's ministers agreed in Vienna on 31st January to leave output quotas unchanged at 28 (for details of individual country quotas, see GER 'Latest Developments', July 2005). Prices fell on OPEC's decision, but futures prices for the outer months of Brent and WTI remained firm on continuing concerns of tight supplies. Market fears were primarily concentrated on Nigeria and Iran. In Nigeria, a series of incidents, including sabotage to oil installations and the killing of oil workers, led to the interruption of exports ( see 'Focus'). There were further fears of an interruption to Iranian oil exports as a result of the growing tension over Iran's nuclear programme. US President, George W Bush increased the tension when, in his State of the Union Message, he called the government there repressive. He also called on the US to make itself less dependent on Middle Eastern oil ( see GER 'Latest Developments'). Iran was reported to have assured the rest of OPEC that there would be no interruption to its oil exports as part of its dispute with the US and others; but many traders remained nervous. Some oil ministers added to market fears by calling for OPEC to cut production in support of oil prices at the cartel's next meeting, which is due on 8th March. For all the fears of oil shortages, Iran was forced to place 19of oil in storage, having failed to sell it on the international market.     

OPEC cuts production, Iraq cuts exports and China seeks more oil

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC ministers agreed to cut crude oil production by 1 mn bpd from 1st January, whilst leaving the group's production ceiling unchanged at 27 mn bpd. Cuts were allocated amongst the seven countries deemed to be overproducing the most ( see Global Energy Review , OPEC, Latest Developments). OPEC's President, Purnomo Yusgiantoro, said OPEC's oil price target should be raised to at least $30 to reflect current dollar weakness. Freight rates fell sharply in the wake of OPEC's decision on output. VLCC rates between the Persian Gulf and Asia went down immediately by 25% and lost a further 60% by the end of the year. Saudi Arabia agreed to cuts of 500,000 bpd. The kingdom meanwhile has added 800,000 bpd to its production capacity with the formal opening of the Qatif and Abu Safah fields, bringing total capacity to 11 mn bpd. The Saudi government stepped up security following renewed threats by al-Qaeda to attack oil installations there. Two car bombs later exploded in Riyadh. In a radical departure from normal trading practice, Saudi Arabia said it would explore the idea of selling oil under long term contracts on a take-or-pay basis. Such arrangements are common in the natural gas industry but rare in the case of oil.     

More price records, more unrest and more refineries

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices continued to set new records despite a decision by OPEC to raise production by 0.5 mn bpd to 27.5 mn bpd from 16th March. On 1st April, WTI futures in New York set a new closing high of $57.27 a barrel, having traded earlier in the day at $57.70. IPE Brent remained just below its previous record, touching $56.15. Crude oil's strength pushed the official prices of some Asian crudes to record levels, including Malaysia's benchmark Tapis grade, which was set at $58.89 a barrel. Product prices rose to new highs as well. In New York, May heating oil reached $1.6638/gall and May gasoline settled at $1.7310 on 1st April, while, in Europe, gasoline rose to an all-time high of $558/t. The market's view on OPEC's decision was that the rise in output was too little, too late. Even a statement by the cartel's President, Shaikh Ahmad Fahd Al Sabah, that OPEC would consider a further rise of 0.5 mn bpd for May did nothing to calm fears.     

Forecast and analysis of the “roof effect” of world net oil-exporting capacity

Oil is extremely crucial to the development of the modern economy.It is important to forecast the oil supply capacity due to its scarcity and non-renewability.This paper attempts to forecast and analyze thirty-five current and potential net oil-exporting countries.Integrating both qualitative and quantitative methods,the oil production and consumption are predicted based on historical data,so that the world net oil-exporting capacity can be obtained.The results show that the "roof effect" of the world net oil-exporting capacity may appear before 2030.Unconventional oil will play an important role in the future world oil market.The competition and cooperation relationships between OPEC and non-OPEC will last for a long time.     

Middle East struggles to find marker crude

One consequence of an increase in OPEC's crude oil production ( see 'Focus') is that a growing proportion of the world's trade is in sour crudes. The main international oil price indicators, however, are sweet crudes, representing production streams that are now in decline. The principal reference crude for sour streams is Dubai's Fatah crude, but production volumes are declining here as well. A new reference price is required for the growing volumes of Middle Eastern crude, but a replacement for Dubai has not yet fully emerged.     

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随着我国石油天然气工业从勘探开发一体化经营向勘探开发分离经营的逐步转变,油气储量资产将作为一种商品在市场上进行效果,这就必须要求确定储量的市场价值。对国内外文献资料的检索表明,在油气储量资产化的研究中,有多种计算确定油气储量资产价值的定量方法,其中比较流行的是采用净现值法,但实际上,这种方法所计算出的储量价值只能作为确定储量市场交易价格的参考,在公开的市场交易中,储量价格的最终确定还依赖于参加交易双方所掌握的信息量及讨价还价的策略,因此,文章提出采用博弈论方法来研究油气储量资产市场定价问题,首先我们建立了油气储量资产市场定价的博弈模型;然后采用均衡分析方法分析了油气储量市场定价博弈均衡的条件;最后分有限次博弈和无限次博弈两种情况进行讨论,并得出相应的结论,即有限次博弈使得某一方获得全部盈余,而无限次博弈使得有耐心和先出价的一方得到更多盈余。     

More price records, Iraq's exports rise and the US probes mogas prices

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
More oil price records were set as refiners worried about supply and inventory levels and other buyers took advantage of a falling US dollar to stock-up on oil and other commodities. October WTI briefly touched $84.10/bbl on 20th September. The US benchmark gained more than most crudes on fears of disruption to oil production in the US Gulf with the arrival of Hurricane Humberto. Some 1.3 mn bpd of production was temporarily shut-in as a precaution, though in the end there was no damage to offshore installations. North Sea crudes rose sharply the following week, pushing IPE Brent into record territory on 28th September, when the London benchmark rose above $81.00/bbl . The new records came despite a decision by OPEC on 11th September to increase its output by 500,000 bpd between August and November. The November target is 27.25 mn bpd, compared with February 2007's level of 25.80bpd. Iraq and Angola are outside the quota system, though Angola is set to join it in the near future.     

OPEC quotas unchanged, violence continues and countries go green

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
OPEC maintained its output ceiling at 28 mn bpd at its meeting on 8th March in Vienna, agreeing to review quotas again on 1st June in Venezuela. Venezuela's oil minister said $60/ bbl was a sustainable price for WTI and that OPEC should react when prices fell below that level, having already asked his fellow ministers to cut the OPEC ceiling by 500,000 bpd. Iraq announced that it was standing by plans to raise production capacity to 3 mn bpd by the end of 2006 despite the widespread chaos and violence. It has not been able to produce more than 2 mn bpd on a sustained basis since the US-led invasion three years ago. Production has been close to 1.8 mn bpd in recent weeks. Exports via Basrah are being restricted by a lack of tugs, pipeline leakages, poor equipment and power cuts. The export route to Ceyhan has been closed by repeated acts of sabotage and is unlikely to reopen for at least eight months according to the country's oil ministry.     

Indonesia fights off oil and gas crises

Rising domestic consumption and falling output have turned Indonesia into a net importer of oil, forcing it to consider withdrawing from OPEC. In recent years, Jakarta has depended on gas for its export revenues. Now, the gas industry is in trouble. Output from the Arun gas fields is declining and the state oil and gas company, Pertamina, was recently forced to delay LNG shipments to its three largest customers. The government is looking for new investment in an attempt to stave off an energy crisis, but foreign companies are unhappy about business conditions there. Meanwhile, oil and gas consumption is rising rapidly thanks to a system of domestic price subsidies, which the government has been unable to end. The delay to much needed reforms in the energy sector threatens not only the oil and gas industries but the economic and political stability of the country as well.     

“复关”对海洋石油勘探开发企业的影响及我们的对策

中国在不久的将来就要“复关”,这是不以任何一个企业的经济利益为转移的客观事实。本文通过多方面的分析认为,“复关”对主要从事海上油气资源勘探开发的中国海洋石油总公司来讲,挑战大于机遇。“复关”后,汇率有可能进一步调整;国内原材料、劳务等价格体系要与国际市场接轨;进口的材料和设备有可能取消减免关税的优惠。“复关”后油价基本趋于缓慢增长的态势,而勘探、开发、生产油气的成本要大幅度增加,目前我们发现的油气田又大都为边际油田,这就给海洋石油勘探开发油气资源带来巨大的困难。本文分析以上的不利因素后指出,我们应实事求是地面对现实,研究制定经营战略,通过寻求新的动态平衡,来促进我们企业的生存与发展。     

中国燃料油市场分析与展望

随着中国经济的稳步快速发展,石化行业炼油深加工能力的大幅提高,中国国家政策导向对燃料油补贴或征税范围及税率的不断调整,中国燃料油供需结构发生明显变化。本文对中国燃料油市场供需情况、消费结构进行了详细分析,并结合两年来国家相关产业政策和税收政策的大幅调整,展望了中国燃料油市场未来的发展趋势。     

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天然气行业基础薄弱，监管政策不健全，存在如下问题：①能源行业之间缺乏合理布局、相互协调和统筹监管；②垄断造成成本高、价格不合理；③国有燃气企业经营理念陈旧、包袱重、效率低、服务质量差；④市场准入和退出机制不健全，短期行为造成下游市场混乱；⑤天然气资源布局造成其成本相对偏高；⑥政府监管不到位，职能分散，效率低。政府应根据天然气行业发展的区域不平衡性，以支持资源开发和基础设施建设，鼓励扩大天然气的使用范围为基本政策目标；制定必要的法律、法规，以保证稳定的投资环境和维护公平的市场秩序为主要实施政策及措施。建议天然气行业近期的工作目标：①研究制定本行业的结构改革和监管改革范围，创建规范的监管组织；②制定规范的特许经营制度，特别是“准入标准”；③鼓励实行合同化、市场化的价格制度(管输费和输配仍应置于政府的严格监管)；出台鼓励大用户、夏季用户的优惠气价政策，给予企业一定限价条件下的协议浮动价格权；④鼓励原国企公司改造为多元化投资的企业。鼓励外资和社会资本进入该领域；⑤研究行业的整体鼓励引导政策。     

Prices back up, sulphur problems and French on strike

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices eased during May until fears of a winter heating oil shortage in the US caused middle distillate and crude oil prices to strengthen, pushing Brent back above $50 a barrel by early June, whilst in the US, WTI figures futures topped $55. Concerns about winter heating oil so early in the year gave rise to fears of even higher prices by autumn. Venezuelan President, Hugo Chavez, stated meanwhile that "most OPEC members" thought $50 a "fair price" for crude oil.     

Price records, violence and dollar weakness (the usual mix)

This section summarizes downstream developments of the previous month. Exploration & Production are covered in 'Upstream Review'.
Oil prices went to new record levels in mid-March as traders contemplated the usual mix of violence in Iraq and Nigeria along with a falling US dollar, allied in this instance with a rise in the gold price above $1,000 an ounce and the paradoxical combination of fears of a world recession and high demand for oil products. The result was WTI front-month futures at an intra-day high of $111.80/bbl on 17th March, following a record $110.30/bbl in the cash market for prompt barrels set four days earlier. The 13th of March also saw Dated North Sea at a record $108.93/bbl, with prompt Brent some $2/bbl above this level. OPEC's price-basket also rose above $100/bbl for the first time. Many product prices also moved into record territory, including an intra-day high of $3.22/gall for Nymex spot heating oil on 14th March. The increases proved too much in the end and crude markets were back below $100/bbl by the end of the month.     

Non-OPEC production near to decline

Last year, the world produced some 82.2 mn bpd of crude oil and natural gas liquids (NGL), of which 48.2 mn bpd, or 59%, came from countries outside OPEC. Most of these non-OPEC countries are now mature oil-producers, in long term decline ( see Box ). A few have still to reach peak output, but non-OPEC production as a whole is within a few years of its peak, after which any net increase in world oil supplies will have to come entirely from OPEC.  

  NON-OPEC PRODUCERS     

18.

催化剂价格形成机制的建立及试行效果     

李永勤 《石油化工管理干部学院学报》2010,12(4):28-33

产品价格,是以产品的生产成本为基础,在市场、政策等各种相关因素影响下形成的。追求合理的产品价格是企业理性采购的要求。催化剂作为炼油化工企业大量需求的原料,其价格的波动是影响产品成本的因素之一。催化剂价格形成机制的建立有助于建立科学理性的议价机制平台,协调供需双方利益关系,提升企业的采购管理水平。     

19.

完善我国石油定价机制的政策建议     

史丹 《天然气技术》2006,(4)

我国实行的“与国际油价接轨”的石油定价机制,其最大的好处是有利于鼓励国内石油企业“走出去”,但无助于规避石油价格风险,也不能反应我国石油的供需关系,因此改革与完善现行的石油价格形成机制已势在必行:第一,打破国有企业的市场垄断,鼓励非国有经济进入石油生产领域;取消上下游领域和南北海陆地域的限制;全面开放上游和管道领域;鼓励社会资金进入石油流通领域。第二,建立市场形成价格的机制,国家由价格制订者转变为价格监管者。第三,协调各能源行业的发展,统一考虑其市场化改革进程。第四,用三大石油公司的部分国有股分红设立石油价格风险基金。第五,建立石油期货市场。     

20.

Exports from Azerbaijan: is Europe being too optimistic?     

《Oil and Energy Trends》2008,33(4):3-6

With oil production in decline in most countries outside OPEC, Azerbaijan is seen as one of the few non-OPEC countries capable of increasing its output over the next few years. The EU and the US are anxious to see its output rise as a means of offsetting some of their growing reliance on OPEC in general - and the Middle East in particular - for oil. The EU also sees Azerbaijan as a source of natural gas that might be used to reduce its reliance on Russia.     

催化剂价格形成机制的建立及试行效果

产品价格,是以产品的生产成本为基础,在市场、政策等各种相关因素影响下形成的。追求合理的产品价格是企业理性采购的要求。催化剂作为炼油化工企业大量需求的原料,其价格的波动是影响产品成本的因素之一。催化剂价格形成机制的建立有助于建立科学理性的议价机制平台,协调供需双方利益关系,提升企业的采购管理水平。     

完善我国石油定价机制的政策建议

我国实行的“与国际油价接轨”的石油定价机制,其最大的好处是有利于鼓励国内石油企业“走出去”,但无助于规避石油价格风险,也不能反应我国石油的供需关系,因此改革与完善现行的石油价格形成机制已势在必行:第一,打破国有企业的市场垄断,鼓励非国有经济进入石油生产领域;取消上下游领域和南北海陆地域的限制;全面开放上游和管道领域;鼓励社会资金进入石油流通领域。第二,建立市场形成价格的机制,国家由价格制订者转变为价格监管者。第三,协调各能源行业的发展,统一考虑其市场化改革进程。第四,用三大石油公司的部分国有股分红设立石油价格风险基金。第五,建立石油期货市场。     

Exports from Azerbaijan: is Europe being too optimistic?

With oil production in decline in most countries outside OPEC, Azerbaijan is seen as one of the few non-OPEC countries capable of increasing its output over the next few years. The EU and the US are anxious to see its output rise as a means of offsetting some of their growing reliance on OPEC in general - and the Middle East in particular - for oil. The EU also sees Azerbaijan as a source of natural gas that might be used to reduce its reliance on Russia.