ABSTRACT
A very visible change with the financialization of the oil market is the potential influence of non-oil market actors on the daily and long-term fluctuations of the oil price. The spot market is characterized by short-term contracts, a high rate of turnover, and sensitivity to outside events. The physical spot market is a market for single crude oil cargos, in which it is not unusual for a single cargo to be sold dozens of times before it arrives at a refinery. The Organization of the Petroleum Exporting Countries (OPEC) countries faced a dilemma. They did not wish to contribute to a price collapse but at same time were eager to ensure sales of their own crude. The oil producers outside of OPEC gain market shares rapidly in 1980s, as OPEC cut production in order to sustain the oil price level. Under the market conditions, individual producers, both OPEC and non-OPEC, have no guarantee of the long-term loyalty of their customers.
