Analysis of Saudi Arabia's behavior in normal and interruptions periods in the world oil market

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Economics, University of Isfahan

2 Master student of Energy Economics, University of Isfahan

Abstract

The behavior of Opec’s main exporter such as Saudi Arabia has been the most important problem of Iran and other oil importer or exporter countries. Excess capacity in oil production of Saudi Arabia let them, in respect to other OPEC's members such as Iran, have different behavior in normal and interruptions. In this paper, we use seasonal data in the 2000-2018 period. We modified griffin’s model and estimated it by the ARDL method and investigate the export’s behavior of Saudi Arabia in normal and interruptions periods. We decomposed the other OPEC variable into four different states to evaluate Saudi Arabia's responses in these states. Empirical results show that Saudi Arabia's exports in the normal periods (stability in oil markets) are coordinate and symmetric but in interruptions periods (wars, sanctions,…) is not coordinate and asymmetric with the rest of OPEC countries. also if other OPEC counties have a cumulative increase in oil exports, Saudi Arabia responds in normal and interruptions periods are symmetric (its response is equal in export quantity) but not coordinate (its response is in opposite direction, so export coefficient is negative). This negative coefficient shows that Saudi Arabia's responses in interruptions periods have a stabilizing effect on oil markets. also if other OPEC counties have a cumulative decrease in oil exports, Saudi Arabia's response in normal and interruptions periods is not only asymmetric (its response is not equal in export quantity) but also not coordinate(its response is in opposite direction, so export coefficient is negative). Here also a negative coefficient shows that Saudi Arabia's responses in interruptions periods have a stabilizing effect on oil markets. But the empirical result of griffin's model (1985) says that an export cut by other OPEC, Saudi Arabia's response to these four states is similar.

Keywords

References

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www.iea.org
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new economy and trad
Volume 15, Issue 2
October 2020
Pages 91-113

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History

  • Receive Date: 03 February 2020
  • Revise Date: 05 April 2020
  • Accept Date: 04 May 2020

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