The cartel’s performance between 2001 and 2014—three years before the advent of OPEC+ as opposed to just OPEC, was still robust, reduced oil volatility by as much as 50%, and at least 25%. Further quantifying the group’s actions, the study found that OPEC’s efforts resulted in an average $175 billion annual increase in global GDP.
By country, those economic benefits are distributed $39.4 billion to the United States, $30.9 billion to China, $59.4 billion to the European Union, and $45.6 billion to everywhere else.
Our counterfactual analysis based on monthly data indicates that OPEC, in general, and Saudi Arabia in particular, has succeeded to a limited but important degree in its attempt to employ spare capacity to offset shocks and stabilize the price of oil,” the report’s executive summary reads in part.
The study went beyond quantifying OPEC +’s performance over the years. It also detailed the inelasticity of oil demand, which requires large price movements to shore up small gaps in the market between supply and demand.
The report finds that shale oil has a “limited impact” on the elasticity of the demand for OPEC oil since it is such a small fraction of non-OPEC supply.
“Therefore, the development of shale oil has not significantly reduced the value of OPEC’s buffer. Our results show that OPEC’s spare capacity, as an institutional mechanism, plays a critical role in the well-functioning of the oil market, for the benefit of the global economy.”