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The Oil Market Reactions to OPEC’s Announcements

by 1, 2,* and 3
Hunan Institute of Technology, School of Economics and Management, Hengyang 421001, China
School of Economics and Statistics, Guangzhou University, Guangzhou 510006, China
Economics and Finance Group, Portsmouth Business School, University of Portsmouth, Portsmouth PO1 3DE, UK
Author to whom correspondence should be addressed.
Energies 2019, 12(17), 3238;
Received: 21 July 2019 / Revised: 13 August 2019 / Accepted: 21 August 2019 / Published: 22 August 2019
(This article belongs to the Special Issue Energy Markets and Economics Ⅱ)
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. View Full-Text
Keywords: market reactions; OPEC; oil price reactions; oil risk reactions; production decision market reactions; OPEC; oil price reactions; oil risk reactions; production decision
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MDPI and ACS Style

Liu, Y.; Dong, H.; Failler, P. The Oil Market Reactions to OPEC’s Announcements. Energies 2019, 12, 3238.

AMA Style

Liu Y, Dong H, Failler P. The Oil Market Reactions to OPEC’s Announcements. Energies. 2019; 12(17):3238.

Chicago/Turabian Style

Liu, Yue, Hao Dong, and Pierre Failler. 2019. "The Oil Market Reactions to OPEC’s Announcements" Energies 12, no. 17: 3238.

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