OPEC Fund for International Development

OPEC Monthly Oil Market Report - August 2022

Abstract Evaluation and quality assurance activities of the Comprehensive Nuclear-Test-Ban Treaty Organization (CTBTO) are reviewed with special emphasis on radionuclide technologies. The CTBTO carries out detailed evaluation in all fields of technical verification of the Treaty. The goal is to provide States Signatories with confidence in the quality of data from the International Monitoring System and data products of the International Data Centre. The largest technical evaluation effort has been the quality assessment of the operational software. About 1.3 million lines of source code and scripts were checked. Software characteristics, such as maintainability, were assessed using automated tool-based techniques and improvements were suggested. Specific to radionuclide technologies, several methods have been developed to cope with the large amounts of spectra produced each day by 80 radionuclide monitoring stations around the world. Some of the key evaluation results, such as the peak detection capability of the operational software are presented in detail.

Shadow banking is the process by which banks raise funds from and transfer risks to entities outside the traditional commercial banking system. Many observers blamed the sudden expansion in 2007 of U.S. sub‐prime mortgage market disruptions into a global financial crisis on a “liquidity run” that originated in the shadow banking system and spread to commercial banks. In response, national and international regulators have called for tighter and new regulations on shadow banking products and participants.Preferring the term “market‐based finance” to the term “shadow banking,” the authors explore the primary financial instruments and participants that comprise the shadow banking system. The authors review the 2007–2009 period and explain how runs on shadow banks resulted in a liquidity crisis that spilled over to commercial banks, but also emphasize that the economic purpose of shadow banking is to enable commercial banks to raise funds from and transfer risks to non‐bank institutions. In that sense, the shadow banking system is a shock absorber for risks that arise within the commercial banking system and are transferred to a more diverse pool of non‐bank capital instead of remaining concentrated among commercial banks.The article also reviews post‐crisis regulatory initiatives aimed at shadow banking and concludes that most such regulations could result in a less stable financial system to the extent that higher regulatory costs on shadow banks like insurance companies and asset managers could discourage them from participating in shadow banking. And the net effect of this regulation, by limiting the amount of market‐based capital available for non‐bank risk transfer, may well be to increase the concentrations of risk in the banking and overall financial system.

Abstract This study examines the general relationships between crude oil consumption, real oil price and real GDP using a quarterly time series from 1993 to 2012. Specifically, the long‐term and short‐term GDP and price elasticities of oil consumption per capita were estimated using dynamic panel and pooled data regressions based on Nerlove's oil demand model for 25 countries that represent 75 per cent of global oil demand. Price elasticities were found for most OECD countries. These estimates were low and consistent with previous estimates. According to the study results, the short‐run price elasticity ranged between −0.05 and −0.20 and the long‐run between −0.11 and −0.36. Price elasticities for most non‐OECD countries were either positive or insignificant. Estimates of GDP elasticities varied. The short‐run GDP elasticity was between 0.15 and 1.09, while the long‐run was between 0.21 and 1.54. On average, income elasticity for OECD countries was found to be slightly higher than for non‐OECD countries. Contrary to expectations, we found China's income elasticity to be 0.34 in the short run, but it was 0.76 in the long run.

Abstract On 15 February 2013, a large Earth‐impacting fireball disintegrated over the Ural Mountains. This extraordinary event is, together with the 1908 Tunguska fireball, among the most energetic events ever instrumentally recorded. It generated infrasound returns, after circling the globe, at distances up to ~85,000 km, and was detected at 20 infrasonic stations of the global International Monitoring System (IMS). For the first time since the establishment of the IMS infrasound network, multiple arrivals involving waves that traveled twice round the globe have been clearly identified. A preliminary estimate of the explosive energy using empirical period‐yield scaling relations gives a value of 460 kt of TNT equivalent. In the context of the future verification of the Comprehensive Nuclear‐Test‐Ban Treaty, this event provides a prominent milestone for studying in detail infrasound propagation around the globe for almost 3 days as well as for calibrating the performance of the IMS network.

The ton–kilometre performed as a measure of world air traffic grew 6.1 per cent annually during the last three decades despite many impediments during this period, such as the Asian financial crisis, severe acute respiratory syndrome outbreak, wars in the Middle East and many security-related events. Although all of the world's regions are experiencing fast growth, the aviation traffic pattern varies by region. However, the traffic growth led to more demand for aviation fuel. World aviation oil demand was 1.18 mb/d in 1971. It experienced an annual growth rate of 2.9 per cent, 0.2 per cent ahead of the transportation sector growth rate, and reaching 4.9 mb/d in 2006. With this consumption level, the aviation sector is the second major consumer with an 11.2 per cent share in total oil demand in the transportation sector. The aviation sector burns about 5.8 per cent of total oil consumed in the world. Technology improvement and better load management among other factors caused ongoing improvement in energy efficiency. Regional econometric modelling showed that aviation fuel demand is inelastic to aviation fuel prices despite their inverse impacts on financial balances of individual airliners. The fuel demand is highly responsive to aviation traffic that in turn is mainly a function of economic growth. Elasticises of fuel demand and aviation traffic confirmed the continuation of the ongoing energy intensity decline in the aviation sector by all the regions of the world. In the reference case, aviation incremental fuel demand will be 2.7 mb/d in 2030, which would leave aviation demand at 7.8 mb/d in the same year. Most of the incremental demand, i.e. 0.75 mb/d, will be contributed by China.

Abstract Motorisation in Asia is soaring with rapid growth in incomes non‐lin‐early. Even though car ownership per 1,000 population is still low in countries like China, India or Indonesia, escalating number of cars is affected by GDP growth among other infrastructural factors in a non‐linear manner. This quick growth in car ownership may represent a significant implication on road transport fuel demand. This paper forecasts the demand for road transport fuel in India. For this purpose, econometric models, based on time series data, are constructed as for a major factor affecting fuel demand in road transportation i.e. car ownership.Firstly the econometric car ownership model was attempted in this study, for projecting future car stock in India based on cross section time series technique. The car stock is modelled by using three functional forms, which are the logistic, quasi‐logistic and Gompertz curves. However, to take into consideration countries with different income levels in that part of the world, these models were estimated by using pooled data of seven Asian countries (Japan, China, South Korea, Thailand, Indonesia, Malaysia and India). Then, a set of fuel consumption scenarios were developed in order to make forecast until 2030. These scenarios were generated by taking into consideration car stock, fuel efficiency and the average distance travelled in India.

The purpose of this paper is to examine the real purchasing power of OPEC Member Countries’ oil revenues, which are subject to “the value of the US dollar vis-à-vis other major currencies” and “world imported inflation”. The exponential weighting average formula with a broad basket of currencies is suggested. The basket of currencies is labelled as a broad currency basket and includes the major trading partners of OPEC Member Countries. The weights are normalized OPEC import shares of the countries of the basket and are updated and adjusted every year to incorporate a gradual change in the trade pattern. In other words, the dynamic trade pattern approach is incorporated in the calculations. The nominal dollar oil revenues of OPEC Member Countries are about $5,099 billion during 1970 to 2004, of which $3,725 bn (73 per cent) have been lost due to imported inflation and the dollar's depreciation. Imported inflation and dollar depreciation have had a respective 78.6 per cent and 21.4 per cent contribution to the losses of the purchasing power of OPEC Member Countries. The imported inflation rate approaches a stable low level, but OPEC still has a lot of concerns on dollar swings. The euro offers opportunities for many oil-exporting nations that have extensive trade relations with Euro-zone countries. Payments for oil exports can be invoked in euros at the prevailing dollar-euro rate on the day of a given contract, or any other trigger formula. This would immunize a major portion of OPEC oil revenues from dollar depreciation.