Oil Price Future Regarding Unconventional Oil Production And Its Near-Term Deployment: A System Dynamics Approach

Heretofore, oil prices have been continuously predicted by many researchers using various methods. Among so many factors affecting the oil market, this article foresees the future variations in oil price respecting the new emerging competitors in the oil market, namely unconventional oil, that has received less attention in previous works. The dynamics of oil prices in the global market is investigated via a system approach, regarding the strategies of different oil market players, i.e. OECD/non-OECD member countries, including the mutual causal relationships and mechanisms. Three scenarios are defined to run the model: oil market growth, current situation (base run), and oil market downturn. The results indicate that oil price, which has shown a deep decay in recent years, will gradually reach around $70 per barrel ($41 per barrel in 1993 USD) in the next five years. While there exists oversupply in the global oil market due to unconventional oil production, which will be the case in the near-term, the oil price will not increase considerably up to the year 2025. Surely, an unanticipated shock or crisis on either of the supply side or demand side (e.g. a pandemic disease) can significantly affect both spot and future prices. ? 2021 Elsevier Ltd. All rights reserved.