Abstract
We examine the type and quality of information OPEC needs to successfully stabilize the oil market. Our analysis considers the impact of observational errors regarding market shocks as well as erroneous judgments of demand and supply elasticities. Actual prices resulting from OPEC's historical efforts to dampen volatility are compared to counterfactual prices that would have prevailed had OPEC remained passive. Despite the potentially confounding effect of misinformation, the elevated counterfactuals indicate that OPEC has managed to substantially decrease price volatility. Indeed, during the 2017–2021 OPEC+ period we estimate price volatility would have been up to 100% greater than actual without the actions of OPEC and its allies.
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