Cheating behaviour among OPEC member-states and oil price fairness and stability: an empirical analysis

Journal article


Ibrahim, Masud and Omoteso, Kamil 2022. Cheating behaviour among OPEC member-states and oil price fairness and stability: an empirical analysis. International Journal of Global Energy Issues. 44 (1), pp. 1-33. https://doi.org/10.1504/IJGEI.2022.120775
AuthorsIbrahim, Masud and Omoteso, Kamil
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.

KeywordsOPEC cartel; Cooperation; Cheating; Fairness and oil price stability
Year2022
JournalInternational Journal of Global Energy Issues
Journal citation44 (1), pp. 1-33
PublisherInderscience
ISSN1741-5128
Digital Object Identifier (DOI)https://doi.org/10.1504/IJGEI.2022.120775
Web address (URL)https://www.inderscience.com/info/inarticle.php?artid=120775
hdl:10545/626282
Output statusPublished
Publication dates03 Feb 2022
Publication process dates
Deposited16 Feb 2022, 15:28
Accepted04 Dec 2020
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Attribution-NoDerivatives 4.0 International

ContributorsCoventry University and University of Derby
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