The oil market reactions to OPEC’s announcements

Yue Liu, Hao Dong, Pierre Failler

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)peer-review

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Because of the crucial implications of the market power of OPEC, the aim of this paper was to investigate the oil asymmetric market reactions, such as the price and risk reactions, to OPEC’s announcements. Specifically, this paper first explored the oil price reactions to OPEC’s announcements and their heterogeneity to depict the directional role of OPEC based on event study methodology. Furthermore, this paper analyzed the oil risk reactions in the framework of a linear model. Our findings reveal several key results. The oil price reactions to OPEC production decisions behave quite heterogeneously in three kinds of decisions. Specifically, the reaction to announcements of a production increase shows an invert “U” shape, whereas there is a linear effect of cut announcements. Otherwise, when a maintain decision is announced, the oil prices have no obvious change over the sample period. Additionally, the oil risk reactions to OPEC’s announcements are heavily related to the interaction item between OPEC decisions and its production over full sample periods. Furthermore, OPEC’s role in promoting stability in crude oil markets by changing its production shows a heterogeneous condition after global financial crisis.
Original languageEnglish
Title of host publicationEnergy Markets and Economics II
Subtitle of host publicationPrinted Edition of the Special Issue Published in Energies
EditorsSeema Narayan
PublisherMDPI AG
Number of pages15
ISBN (Electronic)978-3-03936-677-4
ISBN (Print)978-3-03936-676-7
Publication statusPublished - 25 Aug 2020

Publication series

PublisherMultidisciplinary Digital Publishing Institute
ISSN (Print)1996-1073


  • market reactions
  • OPEC
  • oil price reactions
  • oil risk reactions
  • production decision


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