The international oil market of the 21st century : increased competition through state intervention

This thesis investigates the brewing 4th era of the international oil market. The result of the study shows that we are in a period of uncertainty and change; market mechanisms are changing and new key players are emerging. In addition to traditional producer National Oil Companies (NOC), the past decade has seen an increase of NOCs belonging to states whom are net importers of oil. These companies are identified as key drivers of current market changes and case studies of these revealed two clusters with regards to their perception of oil. The former identifies oil as common pool good and the latter as a toll good. Furthermore NOCs have developed from being passive players to vertically and horizontally integrated global companies. This thesis argues that the state-private relations behind these new NOCs have been powerful tools to overcome market failure of imperfect competition. However, the relation to the state appears to be a double-edged sword, since these NOCs often are part of a broader vision of economic growth and are thereby obliged to divert financial and organizational capacity towards non-commercial activities. NOCs with large oil reserves have accelerated their subsidization and in many cases they have partnered with consumer NOCs instead of IOCs. These trends in tandem create a combination of government and market failure namely that of imperfect information