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Global Institutions and Their Impact on the Capitalization of Oil Companies

Global Institutions and Their Impact on the Capitalization of Oil Companies

Journal of Institutional Studies, , Vol. 11 (no. 2),

Among the reasons affecting oil prices, are: decisions taken by OPEC member countries; change in the dollar rate; geopolitical instability, etc. Some researchers adhere to the position that one of the most important factors shaping the demand and supply for oil is the current stage of the business cycle, within which there is an increase and decline in industrial activity with corresponding consequences for companies. According to the results of econometric studies, it was shown that decisions on quotas made by OPEC countries and deviations from them are significant and affect the change in oil prices, which, in turn, should affect the value of shares of oil companies. The problem of the climate agenda and environmental pollution is becoming ever more acute. The issue of sustainable environmental development is part of the UN Millennium Goals and includes reducing greenhouse gas emissions, protecting ecosystems (including the coastal zone) and forests. This direction correlates with the concept of sustainable development, which implies that the present generation will consume in moderation and will not deprive the future generation of the ability to use existing resources (including energy). It is necessary to take into account the trend aimed at the environmental component of the economy, since the transition to “green energy”, the development and improvement of technologies that reduce emissions – all this will affect oil companies in the long term. Another specific risk that may arise from investing in oil companies is the sanctions policy of other states. Firms in the oil industry operate around the world, so even if their headquarters are not located in a country against which sanctions are imposed, they can still be affected, as they will have to reduce activity or freeze projects and cooperation with companies in this country.

Keywords: capitalization; oil industry; OPEC; sanctions policy; climate agenda

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