The effect of OPEC policy decisions on oil and stock prices

This paper presents evidence of the effects of OPEC policy decisions on the US and UK stock markets, as well as on oil prices, during periods of conflict and non‐conflict from 1986 to 2004. The outcomes of this study are potentially valuable in assessing future strategies for OPEC policy decisions o...

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Bibliographic Details
Published in:OPEC review 2006-03, Vol.30 (1), p.1-18
Main Authors: Guidi, Marco G.D., Russell, Alexander, Tarbert, Heather
Format: Article
Language:English
Subjects:
Applied sciences
Conflict
Crude oil prices
Decisions
Economic conditions
Economic data
Economic policy
Energy
Energy economics
Exact sciences and technology
Fossil fuels and derived products
General, economic and professional studies
International economic organizations
Markets
Oil
Oil and gas production
Oil production
Petroleum
Petroleum industry
Policies
Prices
Pricing
Production
Securities markets
Securities trading
Stock exchanges
Studies
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Summary:This paper presents evidence of the effects of OPEC policy decisions on the US and UK stock markets, as well as on oil prices, during periods of conflict and non‐conflict from 1986 to 2004. The outcomes of this study are potentially valuable in assessing future strategies for OPEC policy decisions on oil production targets for its Members. This paper also adds to the strong body of evidence supporting the hypothesis that market returns are influenced by factors that affect business conditions, such as oil price shocks. The key findings are that there are asymmetric reactions to OPEC policy decisions during conflict periods for the US and UK stock markets. During conflict periods, oil markets require time to incorporate OPEC decisions. Conversely, in non‐conflict periods the evidence suggests that the oil markets incorporate OPEC decisions efficiently.
ISSN:0277-0180
1753-0229
1468-0076
1753-0237
DOI:10.1111/j.1468-0076.2006.00157.x