This document contains 3 graphical simulations showing the impact of crises on oil prices and how equilibrium can be restored. It discusses the Iran-Iraq war and how Kuwait maintained oil production volumes to avoid costs, which became inevitable when Iraq invaded Kuwait and burned oil fields. It also discusses the Arab revolutions in 2011 and their impact on lowering oil prices and increasing costs due to a supply and demand imbalance. Maintaining stable oil supplies and prices involves complex dynamics and tradeoffs between producers, consumers, and geopolitical events.
1. OIL CRISIS MANAGEMENT
(cost transfers)
2 graphical simulations
of crises impacting on
the Oil price and
amplification
mechanisms leading to
a return to the stability of
the energy supplies and
fixed price
IRAK-IRAN WAR
ARAB REVOLUTION
BUSINESS INNOVATION
RESEARCH DEVELOPMENT
2. IranIrak war and oil crisis management
No high Price
= No costs
COST TRANSFER ANALYSIS
ENVIRON Koweit maintained Oil Volume
Koweit MENTAL Production to avoid costs →
IRAN invasion DAMAGES Costs were inevitable when
Cost Irak envaheded Koweit and
WHEN OIL burned of the volumes of oil
FIELDS instead of redcuigng the
Costs of BURNED production s required by Irak
No duc
pr
war o
rm tio
EQUILIBRIUM US Solution
al n (1990)
Invasion IRAK Irak KOWEIT USA Invasion
of Irak endebted of Irak
is n Price of
ris ctio
C u oil is low US Solutions
(2012)
d
pro + Energy Act
S D + Strategy of
diversification
Cost = loss High
S >> D Price oil
Pressure to
Irak increase the Production USA Oil dependencies
Requirements Volume On Koweit foreign import
oil price
GS RADJOU
unchanged
(Source: judgement call)
3. Arab revolutions and Oil crisis management:
Geo-
Political
risk costs
World commodity/oil Low Prices
Arab
ΔP<0
(2011) Oil Relative
(Volume) revolution demand
+ …... ----> 2011,
+ 3%)
+ Syria ΔP>0 Oil high
+ Iran (Volume) price cost cost
ΔP < 0 Oil Relative
(Volume) demand
Normal --> 2010,
Volume of Oil low +1%
Production price
Cost=loss
S Equilibrium D
World (OPEC, China, Russia, USA,....) Hydrocarbon Exploration (Oil, Gas,...)
S=D No cost = No need gas exploration
Cost tranfers: Oil high price => costs because not able to produce and
S<D the relative increase of demand (S< D) leads to cost for world gas
GS RADJOU exploration (Source :Surgutneftegas”)
4. CONTACT CONCERNING THESE SLIDES
(Still work in progress)
For a suggestion or a comments,
Please, send a feed-back at:
Georges RADJOU, CEO, MBA, DUPEBH
georges_radjou_wb@hotmail.com