Price shocks are a feature of international oil markets, with the oil price collapse in the second half of 2014 being the most recent example. These episodes are a source of macroeconomic disruption that harm economic activity in the short and medium term, particularly for oil-exporting countries. The recent emergence of non-conventional oil – such as light, tight oil – represents a critical change in oil markets. Investments in non-conventional oil react very aggressively to changes in oil prices, impacting the structure of oil markets, and could reduce volatility in the future.
Sheltering the Economies of Oil Exporting Countries From Energy Shocks
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