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RIYADH: The efforts of major oil producers within OPEC+ to stabilize prices curbed volatility by more than two thirds a new study has found.
It looked at both the impact of the Organization of the Petroleum Exporting Countries (OPEC) over the last 50 years as well as the group known as OPEC+ which was created in 2017 and includes other major producers such as Russia.
The study was co-authored by the King Abdullah Petroleum Studies and Research Center (KAPSARC) and published by the International Association of Energy Economics. 
The research finds that between 2017 and 2019, the actions of OPEC+ reduced monthly oil price volatility by 64 percent.
Between 2001 and 2014 OPEC’s attempts to stabilize the oil market reduced oil price volatility by at least a quarter and by as much as half.
The peer-reviewed research paper, titled “OPEC’s Pursuit of Market Stability” concludes that OPEC’s use of spare capacity has achieved a significant reduction in oil price volatility, especially during the more recent OPEC+ period.
The study highlights the challenges of achieving stability in world oil market, with disruptions to demand and supply being both large and frequent and originating from multiple sources such as war, natural disaster and financial crisis. 
The research also outlines how market reaction to each shock can be magnified by the inelastic nature of crude oil demand and supply. This means that in the absence of market intervention, large price movements are required to close relatively small gaps in the market.
For many years, OPEC in general, and ��������Ƶ in particular, has sought to offset market shocks, the most recent example being ��������Ƶ’s attempts to respond to the COVID-19-induced oil market crisis.
According to the paper, OPEC’s spare capacity, the majority of which is held by the Kingdom, has been sufficient to avoid major outages for much of the group’s recent history.
The study found that OPEC’s efforts to stabilize the oil market increase global GDP by an average of $175 billion annually (around 0.2 percent of the world’s GDP) — with the greatest benefits accruing to oil-intensive economies.
The authors’ analysis also addresses the development of shale oil and its impact on the market, finding that it has not significantly reduced the need for OPEC’s spare capacity. 
Shale only accounts for a small amount of non-OPEC supply, 11 percent as of 2019, and so its impact on the elasticity of total non-OPEC supply is limited, despite the fact that its short-run price elasticity is much higher than that of conventional oil.
KAPSARC was founded as a non-profit institution for independent research into global energy economics. It brings together an international group of expert researchers of more than 15 nationalities. Located in Riyadh, the center was established by the Saudi Council of Ministers, and its facilities were opened in 2013.