THE CHANGING STRUCTURE OF THE INTERNATIONAL OIL INDUSTRY - IMPLICATIONS FOR OPEC

This paper examines the changes in international oil market structure observed in the 1980s and early 1990s and assesses possible effects on oil market conditions in the future and implications for OPEC, It focuses on the trend toward a more vertical organization mainly resulting from substantial purchases of downstream assets by state owned oil companies in major oil producing countries, While the Gulf war prevented greater horizontal concentration of oil reserves, it merely interrupted the trend toward vertical concentration in the international oil industry, The vertical integration of only some of the OPEC members will cause a further divergence of goals within the organization resulting in a lower likelihood of OPEC regaining its former position as an effective cartel, If the trend toward greater vertical concentration increases, future oil prices will, in part, be affected by decisions made by vertically integrated firms.