Equilibrium Oil Market Share under the COVID-19 Pandemic

  • Xiaojun Chen
  • Yun Shi
  • Xiaozhou Wang
    • Categories Applications - OR and Management Sciences, Complementarity and Variational Inequalities, Stochastic Programming Tags , , , Short URL: https://optimization-online.org/?p=16611

    Equilibrium models for energy markets under uncertain demand and supply have attracted considerable attentions. This paper focuses on modelling crude oil market share under the COVID-19 pandemic using two-stage stochastic equilibrium. We describe the uncertainties in the demand and supply by random variables and provide two types of production decisions (here-and-now and wait-and-see). The here-and-now decision in the first stage does not depend on the outcome of random events to be revealed in the future and the wait-and-see decision in the second stage is allowed to depend on the random events in the future and adjust the feasibility of the here-and-now decision in rare unexpected scenarios such as those observed during the COVID-19 pandemic. We develop a fast algorithm to find a solution of the two-stage stochastic equilibrium. We show the robustness of the two-stage stochastic equilibrium model for forecasting the oil market share using the real market data from January 2019 to May 2020.

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    https://www.polyu.edu.hk/ama/staff/xjchen/ChenXJ.htm

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