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OPEC “Fair Price†Pronouncements and the Market Price of Crude Oil

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  • Celso Brunetti
  • Bahattin Buyukgahin
  • Michel A. Robe
  • Kirsten R. Soneson

Abstract

OPEC producers, individually or collectively, often make statements regarding the “fair price†of crude oil. In some cases, the officials commenting are merely affirming the market price prevailing at the time. In many cases, however, we document that they explicitly disagree with contemporaneous oil futures prices. A natural question is whether these “fair price†pronouncements contain information not already reflected in the market price of crude oil. To find the answer, we collect “fair price†statements made from 2000 through 2010 by officials from OPEC or OPEC member countries. Visually, the “fairprice†series looks like a sampling discretely drawn (with a lag) from the daily futures market price series. Formally, we use two primary methodologies to establish that “fair price†pronouncements have little influence on the market price of crude oil and provide little or no new news to oil futures market participants.

Suggested Citation

  • Celso Brunetti & Bahattin Buyukgahin & Michel A. Robe & Kirsten R. Soneson, 2013. "OPEC “Fair Price†Pronouncements and the Market Price of Crude Oil," The Energy Journal, , vol. 34(4), pages 79-108, October.
    • Handle: RePEc:sae:enejou:v:34:y:2013:i:4:p:79-108
    DOI: 10.5547/01956574.34.4.5
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    References listed on IDEAS

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    1. Franz Wirl and Azra Kujundzic, 2004. "The Impact of OPEC Conference Outcomes on World Oil Prices 1984-2001," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 45-62.
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