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Global Academic Journal of Economics and Business
Volume-7 | Issue-06
Original Research Article
Opec and Oil Price: An Impact Analysis of Opec’s Role in the International Oil Pricing
Oyeinbrakemi Innocent Azebi , Mr. Doumiepri I. Joseph
Published : Nov. 25, 2025
DOI : https://doi.org/10.36348/gajeb.2025.v07i06.006
Abstract
This study examined the influence of the Organisation of Oil Exporting Countries (OPEC) on world oil price. Data on world oil price, OPEC oil supply, world oil demand and world inflation were sourced from various publications of OPEC, and analysed using the Augmented Dickey-Fuller (ADF) unit root test, Autoregressive Distributed Lag (ARDL) Bounds test, Breusch Godfrey Serial Correlation LM Test, and variance inflation factor (VIF) test for multicollinearity. The result of the ADF unit root test showed that OPEC oil supply was stationary at level, while world oil price, world oil demand and world inflation were stationary at first difference. The result of the ARDL bounds test confirmed that the variables are related in the long run given that the ARDL F-statistic value of 5.261561 is greater than the upper critical bound value of 3.67. Further findings revealed that a unit increase in oil supply by OPEC led to a 0.412751 unit increase in world oil price, while a unit increase in world oil demand resulted in a 2.813161 unit increase in world oil price. A unit increase in world inflation caused world oil price to increase by 0.345 unit. Based on the respective probability values which are less than the 0.05 level of significance, the study concludes that OPEC oil supply, world oil demand and world inflation, all impacted significantly on world oil price. This study recommends among others that, nations must continue to source for sustainable and dependable alternatives to crude oil.

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