The disagreements between Russia and Opec probably lead to a further continuous oil price drop. The oil industry is an oligopolistic industry: all the major oil-exporting countries obtain monopoly power through cooperation and control oil prices by controlling the oil supply. This phenomenon may not exist in the future. Because of Russia's differences, they no longer have the strength to control supply. In addition, game theory tells us that non-cooperative behavior reduces the probability of future cooperation; cooperation can only be obtained unless there are large enough profits existing, so no one has an incentive to cheat on others. However, due to the current economic environment and the development of new technologies, such profits do not exist and will not exist. Without cooperation, the increased level of competitiveness will drag the oil price further down.
No comments:
Post a Comment