The Organisation of Petroleum Exporting Countries (OPEC): foundations of a strategic approach

Eshhati, Mohamed A. (2001) The Organisation of Petroleum Exporting Countries (OPEC): foundations of a strategic approach. (PhD thesis), Kingston University,


The thesis adopts a strategic management with an explicit game theory orientation to the analysis of the OPEC coalition. Two games are identified, one between OPEC and the oil majors the MNOCs, (G1) and another between the members of OPEC themselves (G2). The payoff structures of the games are identified using a Delphi methodology, supported by an extensive literature together with output data relating to the OPEC coalition. The analysis reveals prisoners' dilemma structures in the case of G1, and an evolutionary- game, a chicken game in the case of G2. The thesis makes a contribution to knowledge in a number of respects. Coalition behaviour is analysed in terms of evolutionary- stability, an innovation with respect to the study of coalitions. New data is used, as a result of the Delphi procedure. The underlying mathematical structure of the Delphi procedure is set out with reference to the estimation of payoff structures of the respective games. A cardinal utility approach is used as a basis for calculating the payoff matrices involved in the various OPEC games. Further it is hoped the thesis indicates the potential scope of game theory as a tool of strategic analysis. OPEC is playing important roles in: the international oil industry, and the world oil market. Arguably, in the oil industry, OPEC has a number of tasks, including the promotion of international competition. This would best serve its members' interests. With regard to the performance of OPEC to date, the organisation has achieved part of its objectives, but not all of them. In this research the objectives of OPEC have three dimensions: economic, political and technical. The aims of the research are to provide a deeper understanding of OPEC and show its role in the world oil market and industry. The use of the strategic management approach contributes to discover new insights and perspectives of OPEC's behaviour.

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