The Oil Market: Recent Developments and Outlook

12 Pages Posted: 6 Oct 2017

Date Written: August 1, 2017


The past three years have seen a radical change in the structure of the oil market, as a result of the deep-seated transformation the US oil industry has undergone and of OPEC’s strategic reaction. This has translated into a substantial reduction in the price of oil. Specifically, this article analyses three key factors behind oil market developments in the past two years: the resilience of US shale oil production, the new turn in OPEC’S strategy to cut output and the slowdown in demand. Further, the medium and long-term outlook for this market is discussed, with the conclusion drawn that a marked rise in prices owing to the foreseeable course of supply and demand is not expected. While some fall-off in supply is contemplated owing to the decline in investment, demand, too, will be contained by greater efficiency in the use of oil-derived fuels and social awareness about their negative externalities.

Suggested Citation

Santabárbara, Daniel, The Oil Market: Recent Developments and Outlook (August 1, 2017). Banco de Espana Article 18/17. Available at SSRN:

Daniel Santabárbara (Contact Author)

Banco de España ( email )

C/ Alcalá, 48
Madrid, 28014

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