The drivers of oil prices : the usefulness and limitations of non-structural model, the demand-supply framework and informal approaches

Working paper

We discuss three main approaches for analysing oil prices: non-structural models, the supply–demand framework and the informal approach. Each of these approaches emphasizes a certain set of drivers of oil prices. While non-structural models rely on the theory of exhaustible resources as the basis for understanding the oil market, the supply–demand framework uses behavioural equations that link oil demand and supply to its various determinants such as GDP growth, prices and oil reserves. The i...

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Authors: Fattouh, B

• Publication status: Published
• Peer review status: Reviewed (other)
• Series: OIES paper
• Publication date: 2007-01-01
• Paper number: M32
• ISBN: 1901795616
• Language: English
• Keywords: speculation; volatile oil prices; spare capacity; price elasticity; inventories; oil price behaviour; OPEC; OIES; informal approach; supply-demand framework