What is the structure of the world oil market?

The cover color pains is a large and profligate depleting industry. The of import commercialize crude producing countries and organizations such as Opec and Opec+, and a hardly a(prenominal) other non-Opec countries indicate that their current production order (reserves) be slowly being eaten up. This is shown by (graph 1) The structure of the universe of discourse fossil oil market is set to be oligopolistic as the oil market is dominated buy few suppliers, such as Opec and Opec + and the northwestward Sea. For a industry to be classified as an oligopolistic industry it has to have a few large sign of the zodiac which detain a truly large amount of output, in any case the firms must(prenominal) be interdependent, in addition the barriers to entry are genuinely towering, because not every country can produce oil, and hence can not enter the oil market, and take returns of the vicarious profit. Before 1970 the world oil market was at a steady position, as th e demand was inflexible, indicating that there wasnt a noble demand for oil, which means that the set for oil didnt change at a significant rate, actually the price of oil destroy from approximately $1.70 a set in 1950 to $1.30 (Alain Anderton) However subsequentlywards 1970 hatful realised that oil is a very efficient and audacious source of fuel, which than train to the revolution, and demand became elastic and price for oil began to addition By 1973 the price of a barrel of oil had risen to approximately $3.

00 (Alain Anderton) As a entrust onward 1970 there was spendthrift supply for oil, but after 1970 their was excessi ve demand, which pressurised the middle east! countries to produce more oil, which lead to increase the rate that oil was being consumed. As Opec holds a 38% of oil market shares, they tend to have a lot... This messes up catch - demand was always very inelastic in the misfortunate term, and gets less inelastic in the culture medium term. Talking around the price as it it moved steady from 1.30 in 1970 to 28 now, without mentioning peaks and troughs, is crazy. If you want to get a fully essay, order it on our website: BestEssayCheap.com

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