World oil marketing in transition

The rise of direct marketing of crude oil by state-owned enterprises from producer countries has added to the instability of world oil trade. The major cause of the rise of direct marketing was the changing structure of barriers to entry into the industry by new firms. Upstream, shifting entry barriers enabled state-owned enterprises increasingly to displace international companies; meanwhile, independents were increasing their share of refining capacity downstream. These changes contributed to the demise of traditional patterns of vertical integration. But these vertically integrated linkages had served to stabilize world oil trade, so their demise added to the turbulence of the international market. In response, both governments and firms from oil-importing countries have sought, with mixed success, to create new ties to sellers in order to stabilize the market.