The Response of Global Oil Inventories to Supply Shocks
Oil inventories are essential in alleviating realized and anticipated supply shocks and represent a key market indicator. This study examines the responses of global and country oil inventories to supply shocks under tight and loose market conditions. We utilize an expanded version of the GVAR model...
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| Format: | Article |
| Language: | English |
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MDPI AG
2025-06-01
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| Series: | Commodities |
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| Online Access: | https://www.mdpi.com/2813-2432/4/2/10 |
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| author | Philipp Galkin Jennifer Considine Abdullah Al Dayel Emre Hatipoglu |
| author_facet | Philipp Galkin Jennifer Considine Abdullah Al Dayel Emre Hatipoglu |
| author_sort | Philipp Galkin |
| collection | DOAJ |
| description | Oil inventories are essential in alleviating realized and anticipated supply shocks and represent a key market indicator. This study examines the responses of global and country oil inventories to supply shocks under tight and loose market conditions. We utilize an expanded version of the GVAR model, adding the OECD oil inventories variable, incorporating major oil-producing countries: Iran, Russia, and Venezuela, and extending the coverage period. Our simulations indicate that a negative global supply shock significantly affects oil inventories under “tight” market conditions. The model correctly predicts the trajectory of changes to oil inventories in South Korea following a supply shock to Russian production in tight markets and Iranian output in loose markets. This case also shows that commercial players, using their inventories as a buffer, can negate government attempts to maintain constant levels of reserves. Overall, the response to the oil inventory tends to vary across producing and importing countries and market conditions. Such dynamics highlight potential problems with specific policies, such as using inventories as a buffer to alleviate price fluctuations or disrupting the oil production of individual countries through sanctions, as these measures oftentimes result in unintended consequences due to complex interconnections of the global oil market. |
| format | Article |
| id | doaj-art-cb0a928f9d394e69ab5f64afc1e8f862 |
| institution | Matheson Library |
| issn | 2813-2432 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Commodities |
| spelling | doaj-art-cb0a928f9d394e69ab5f64afc1e8f8622025-06-25T13:39:27ZengMDPI AGCommodities2813-24322025-06-01421010.3390/commodities4020010The Response of Global Oil Inventories to Supply ShocksPhilipp Galkin0Jennifer Considine1Abdullah Al Dayel2Emre Hatipoglu3King Abdullah Petroleum Studies and Research Center (KAPSARC), P.O. Box 88550, Riyadh 11672, Saudi ArabiaKing Abdullah Petroleum Studies and Research Center (KAPSARC), P.O. Box 88550, Riyadh 11672, Saudi ArabiaKing Abdullah Petroleum Studies and Research Center (KAPSARC), P.O. Box 88550, Riyadh 11672, Saudi ArabiaKing Abdullah Petroleum Studies and Research Center (KAPSARC), P.O. Box 88550, Riyadh 11672, Saudi ArabiaOil inventories are essential in alleviating realized and anticipated supply shocks and represent a key market indicator. This study examines the responses of global and country oil inventories to supply shocks under tight and loose market conditions. We utilize an expanded version of the GVAR model, adding the OECD oil inventories variable, incorporating major oil-producing countries: Iran, Russia, and Venezuela, and extending the coverage period. Our simulations indicate that a negative global supply shock significantly affects oil inventories under “tight” market conditions. The model correctly predicts the trajectory of changes to oil inventories in South Korea following a supply shock to Russian production in tight markets and Iranian output in loose markets. This case also shows that commercial players, using their inventories as a buffer, can negate government attempts to maintain constant levels of reserves. Overall, the response to the oil inventory tends to vary across producing and importing countries and market conditions. Such dynamics highlight potential problems with specific policies, such as using inventories as a buffer to alleviate price fluctuations or disrupting the oil production of individual countries through sanctions, as these measures oftentimes result in unintended consequences due to complex interconnections of the global oil market.https://www.mdpi.com/2813-2432/4/2/10crude oilinventorysanctionssupply shockgeopoliticsGVAR |
| spellingShingle | Philipp Galkin Jennifer Considine Abdullah Al Dayel Emre Hatipoglu The Response of Global Oil Inventories to Supply Shocks Commodities crude oil inventory sanctions supply shock geopolitics GVAR |
| title | The Response of Global Oil Inventories to Supply Shocks |
| title_full | The Response of Global Oil Inventories to Supply Shocks |
| title_fullStr | The Response of Global Oil Inventories to Supply Shocks |
| title_full_unstemmed | The Response of Global Oil Inventories to Supply Shocks |
| title_short | The Response of Global Oil Inventories to Supply Shocks |
| title_sort | response of global oil inventories to supply shocks |
| topic | crude oil inventory sanctions supply shock geopolitics GVAR |
| url | https://www.mdpi.com/2813-2432/4/2/10 |
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