The global oil market with a price ceiling for one of the producers

Abstract

Subject. The article considers the functioning of the oil market under a price ceiling set for one of the producers. Objectives. The aims are to develop tools to study the global oil market under sanctions restrictions, define the characteristics of sustainability of such a market when applying sanctions to one of the producers, analyze economic consequences of setting a price ceiling for the purchase of oil, explore the possibilities of achieving equilibrium states. Methods. The main research tool is mathematical modeling of the market. The research methodology rests on the study of changes in market characteristics caused by the introduction of non-market methods of its regulation. Results. I built a game-theoretic model suitable for studying the global oil market with sanctions restrictions, defined critical parameters of the market caused by the introduction of a price ceiling, determined the ways to stabilize the market with this ceiling. Furthermore, I examined the current state of the market and determined the consequences of changing the characteristics of sanctions restrictions. Conclusions. The model is suitable for studying the current state of the global oil market. The introduction of a price ceiling, in contrast to a complete embargo, allows the market to remain stable within certain limits. To stabilize the market, it is also possible to conclude private contracts at discounted prices. Current trends in the development of the global oil market require the inclusion of oil importing countries in the set of players in the developed model.