Columbia International Affairs Online: Working Papers

CIAO DATE: 08/2011

The Functioning of the International Oil Markets and its Security Implications

Giacomo Luciani

May 2011

Centre for European Policy Studies

Abstract

The paper discusses the link between security of oil supplies and the functioning of international oil markets. It is argued that wide and frequent variations in price are in themselves a source of insecurity for individual consumers and national economies alike. Furthermore, the impossibility of predicting future prices discourages investment and increases the fragility of the system. The paper puts forward several policy proposals to reduce excessive price fluctuations and improve security of supply at reliable prices.