A popular view is that the surge in the price of oil during 2003-08 cannot be explained by economic fundamentals, but was caused by the increased financialization of oil futures markets, which in turn allowed speculation to become a major determinant of the spot price of oil. This interpretation...

<section xml:id="fut21674-sec-0001"> We assess the causes and implications of the greater financial participation in commodity markets post‐2003. Focusing on crude oil, we build a calibrated macro‐finance model of oil prices and quantities that also determines consumer welfare. We show that shifts in the preferences and...</section>

The main purpose of this paper is to review the evolution of OPEC models and to link this evolution to some key events in the oil market. Our main conclusion is that OPEC’s pricing power varies over time. In many instances, OPEC can lose power to limit oil price movements in either direction....