Skip to main content
SpringerLink
Log in

OPEC’s Influence on European Oil Stock Returns

  • Chapter
  • First Online:
Energy Technology and Valuation Issues

Abstract

This study examines the influence of OPEC quota decisions (quota cut—increase or unchanged decision) on the stock price of four typical-listed-oil firms in Europe. In addition, we consider the influence on the Brent crude oil price. Using the event study methodology, 51 announcements are considered in the period 1991–2012. The results imply that OPEC quota decisions have a direct influence on both crude oil returns and oil firms’ stock returns. This influence is either positive or negative and large or small, depending on the type of decision and the size of the firms in terms of market capitalization. However, since the difference between the two small firms is also significant, we conclude that market capitalization alone is not a determining factor.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 119.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    http://www.opec.org/opec_web/en/about_us/23.htm.

  2. 2.

    http://www.opec.org/opec_web/en/press_room/28.htm.

  3. 3.

    One barrel of oil contains around 158 L of oil.

  4. 4.

    http://www.econbrowser.com/archives/2009/04/causes_of_the_o.html.

  5. 5.

    http://www.bloomberg.com/news/2010-06-15/bp-s-credit-rating-cut-by-fitch-to-bbb-two-levels-above-junk-from-aa.html.

  6. 6.

    http://www.guardian.co.uk/business/marketforceslive/2010/jun/28/premieroil.

References

  • Bina C, Vo M (2007) OPEC in the epoch of globalization: an event study of global oil prices. Global Econ J 7(1):1–49

    Google Scholar 

  • Boyer MM, Fillion D (2007) Common and fundamental factors in stock returns of Canadian oil and gas companies. Energy Econ 29(3):428–453

    Article  Google Scholar 

  • Bredin D, Muckley C (2011) The price forming process in energy markets. In: Dorsman A, Westerman W, Karan MB, Arslan O (eds) Financial aspects in energy. Springer, Heidelberg, pp 85–107

    Chapter  Google Scholar 

  • Brown SJ, Warner JB (1980) Measuring security price performance. J Financial Econ 8(3):205–258

    Article  Google Scholar 

  • Brown SJ, Warner JB (1985) Using daily stock returns, the case of event studies. J Financial Econ 14(1):3–31

    Article  Google Scholar 

  • Buyuksahin B, Brunetti C, Robe MA, Soneson KR (2010) Do OPEC members know something the market doesn’t? ‘Fair price’ pronouncements and the market price of crude oil. Working paper. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1652834

  • Demirer R, Kutan AM (2010) The behavior of crude oil spot and futures prices around OPEC and SPR announcements: an event study perspective. Energy Econ 32(6):1467–1476

    Article  Google Scholar 

  • Dorsman A, Koch A, Jager M, Thibeault A (2013) Adding oil to a portfolio of bonds and stocks. In: Dorsman A, Simpson JL, Westerman W (eds) Energy economics and financial markets. Springer, Heidelberg, pp 197–214

    Chapter  Google Scholar 

  • Guidi MGD, Russell A, Target H (2006) The effect of OPEC policy decisions on oil and stock prices. OPEC Rev 30(1):1–18

    Article  Google Scholar 

  • Hammoudeh S, Li H (2005) Oil sensitivity and systematic risk in oil- sensitive stock indices. J Econ Bus 57(1):1–21

    Article  Google Scholar 

  • Huang RD, Masulis RW, Stoll HR (1996) Energy shocks and financial markets. J Futur Mark 16(1):1–27

    Article  Google Scholar 

  • Hyndman K (2008) Disagreement in bargaining: an empirical analysis of OPEC. Int J Ind Organ 26(3):811–828

    Article  Google Scholar 

  • Lin SX, Tamvakis M (2010) OPEC announcements and their effects on crude oil prices. Energy Policy 38(2):1010–1016

    Article  Google Scholar 

  • MacKinlay AC (1997) Event studies in economics and finance. J Econ Lit 35(1):13–39

    Google Scholar 

  • Mazraati M, Tayyebi Jazayeri SM (2004) Oil price movements and production agreements. OPEC Rev 28(3):207–226

    Article  Google Scholar 

  • Nandha M, Faff R (2008) Does oil move equity prices? A global view. Energy Econ 30(3):987–997

    Article  Google Scholar 

  • Sadorsky P (1999) Oil price shocks and stock market activity. Energy Econ 21(5):449–469

    Article  Google Scholar 

  • Sadorsky P (2001) Risk factors in stock returns of Canadian oil and gas companies. Energy Econ 23(1):17–28

    Article  Google Scholar 

  • Schmidbauer H, Rosch A (2012) OPEC news announcements: effects on oil price expectation and volatility. Energy Econ 34(5):1656–1663

    Article  Google Scholar 

  • Simpson JL (2008) The effect of OPEC production allocations on oil prices. In: Twenty first Australian finance and banking conference 2008 paper. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1231602

  • Simpson JL (2010) Do the major oil companies anticipate OPEC production allocations? An examination of oil and financial market data for arbitrage investment opportunities. J Wealth Manage 12(4):101–118

    Article  Google Scholar 

  • Wirl F, Kujundzic A (2004) The impact of OPEC conference outcomes on world oil prices 1984–2001. Energy J 25(1):45–62

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Groningen, Groningen, The Netherlands

    Maarten Croese & Wim Westerman

Authors
  1. Maarten Croese
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Wim Westerman
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Wim Westerman .

Editor information

Editors and Affiliations

  1. Department of Finance, Faculty of Economics and Business Administration, VU University Amsterdam, Amsterdam, The Netherlands

    André Dorsman

  2. Department of Finance, University of Groningen Faculty of Economics and Business, Groningen, The Netherlands

    Wim Westerman

  3. School of Economics and Finance, Curtin University Curtin Business School, Perth, West Australia, Australia

    John L. Simpson

Rights and permissions

Reprints and permissions

Copyright information

© 2015 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Croese, M., Westerman, W. (2015). OPEC’s Influence on European Oil Stock Returns. In: Dorsman, A., Westerman, W., Simpson, J. (eds) Energy Technology and Valuation Issues. Springer, Cham. https://doi.org/10.1007/978-3-319-13746-9_4

Download citation

Publish with us

Policies and ethics

Search

Navigation