The 2014-16 Oil Price Collapse in Retrospect
With the benefit of hindsight, this paper provides a fresh and comprehensive look at the causes of the 2014-16 collapse in oil prices and its impact on the global economy. It disentangles the contribution of supply and demand factors, assesses the impact on activity in oil exporters and oil importers, and reviews policy responses in these countries. The main conclusions are: (i) the decline in oil prices was predominantly triggered by supply factors, particularly rapid efficiency gains in U.S. shale oil production, but softening demand prospects played a substantial role as well; (ii) the short-term benefits of falling oil prices for the global economy were muted by economic rebalancing in China, a low responsiveness of activity in other oil-importing emerging markets, and a sharp slowdown in U.S. investment as energy sector activity declined and a the U.S. dollar strengthened; (iii) oil exporters with flexible exchange rates and relatively large fiscal buffers fared better than others, but most oil-exporting economies still face significant policy challenges as their medium-term prospects for growth and fiscal revenues have deteriorated; (iv) fundamental changes in the oil market make a return to the oil price levels of the early 2010s unlikely, pointing to the need for accelerated reforms, particularly among oil exporters.
| Main Authors: | , , , , |
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| Format: | Working Paper biblioteca |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018-04
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| Subjects: | OIL PRICES, SHALE OIL, OPEC, OIL EXPORTERS, OIL IMPORTERS, FISCAL POLICY, MONETARY POLICY, ENERGY SUBSIDIES, DIVERSIFICATION, PUBLIC SPENDING, ENERGY CONSUMPTION, GLOBAL ECONOMY, |
| Online Access: | http://documents.worldbank.org/curated/en/211351524855152792/The-2014-16-oil-price-collapse-in-retrospect-sources-and-implications https://hdl.handle.net/10986/29756 |
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| Summary: | With the benefit of hindsight, this
paper provides a fresh and comprehensive look at the causes
of the 2014-16 collapse in oil prices and its impact on the
global economy. It disentangles the contribution of supply
and demand factors, assesses the impact on activity in oil
exporters and oil importers, and reviews policy responses in
these countries. The main conclusions are: (i) the decline
in oil prices was predominantly triggered by supply factors,
particularly rapid efficiency gains in U.S. shale oil
production, but softening demand prospects played a
substantial role as well; (ii) the short-term benefits of
falling oil prices for the global economy were muted by
economic rebalancing in China, a low responsiveness of
activity in other oil-importing emerging markets, and a
sharp slowdown in U.S. investment as energy sector activity
declined and a the U.S. dollar strengthened; (iii) oil
exporters with flexible exchange rates and relatively large
fiscal buffers fared better than others, but most
oil-exporting economies still face significant policy
challenges as their medium-term prospects for growth and
fiscal revenues have deteriorated; (iv) fundamental changes
in the oil market make a return to the oil price levels of
the early 2010s unlikely, pointing to the need for
accelerated reforms, particularly among oil exporters. |
|---|