We show how to determine for each major oil-producing country, under existing market conditions, a Fiscal Operating Range (formed of the oil production levels that generate a fiscal surplus) and an associated Fiscal Price Band (range of oil prices the government budget could withstand without incurring a deficit). The size of the Fiscal Operating Range determines the country's strategic flexibility, which is its ability to deviate from output levels that maximize government revenue in order to accommodate other desired objectives. The commitment to stabilize the oil market, the desire to preserve market shares, or the goal to diversify an oil-dependent economy are potential examples of such objectives. Delineating the scope of this strategic flexibility represents a more realistic and robust approach than focusing solely on decisions that maximize a specific objective. The OPEC+ cooperative framework increases the strategic flexibility of each member country. Our analysis reveals how the distribution among OPEC+ members of changes to collective output impacts the individual Fiscal Price Band of those members. We derive general closed-form formulas for the bands that are consistent with market equilibrium conditions and can be applied to real-life cases. We use Saudi Arabia as a case study over 2021-2024. For instance, based on 2024 budget and operating conditions, we estimate the Fiscal Operating Range facing Saudi Arabia extended from 9.40 to 13.21 mbbl/d (all liquids), with an associated Fiscal Price Band between $64.85/bbl and $85.30/bbl.
This paper studies carbon price variation using a generalized present value decomposition. We treat the carbon net convenience yield as a dividend-like cash flow analogue that measures the value of current allowance ownership relative to deferred ownership. Using EUA futures data from August 2008 to April 2026, we find that both carbon returns and net convenience yield growth contribute to carbon price variation, with net convenience yield growth playing a substantially larger role. The result is robust to funding cost adjustments, EU ETS phase subsamples, and several other robustness checks. Thus, allowances behave more like commodities, but with distinctive features.
This study examines extreme joint price movements in agricultural futures through the lens of the coexceedance framework. Focusing on two key substitute pairs, corn-soybean and winter wheat-spring wheat, we introduce supply-side information shocks from USDA reports as a novel determinant of coexceedances. Using partial ordered logit and quantile regression models, we analyze both the occurrence and the intensity of coexceedances in response to information shocks and macro-financial factors. The results show that USDA surprises significantly increase the likelihood and degree of coexceedances, with wheat markets exhibiting stronger and more persistent joint extremes than corn and soybeans. Effects are asymmetric: price-bearish surprises amplify downside risk, while price-bullish surprises intensify upside extremes. Macro-financial shocks further reinforce these patterns, particularly in wheat markets. These findings extend the coexceedance literature to agricultural futures, highlighting the systemic relevance of public information releases for risk management and market stability.
