PRIX index
The PRIX ( acronym for P olitical R isk I nde x ) is a financial indicator of the international oil market. The index predicts the global political risks that can affect the oil market worldwide. The methodology is based on the Purchasing Managers Index. Over 250 experts create a contribution that is used to calculate an index value for each country from the list of the 20 largest oil exporters. Each country value is then weighted with the total export of each country so that a global PRIX value can be calculated that summarizes the political risks for the international oil market.
Each expert contributes to one of 20 countries. The experts are asked whether it is likely that the political developments over the next three months could lead to reduced, unchanged or increased oil exports from the particular country. The following formula of the diffusion index is used to process the experts' answers: INDEX = (P1 * 1) + (P2 * 0.5) + (P3 * 0), where P1 = the proportion of experts who have 'increased oil exports' anticipate political developments; P2 = the proportion of experts who predict 'unchanged oil exports'; P3 = the proportion of experts who anticipate 'reduced oil exports'.
An index value of 50 means that oil exports are unlikely to change. An index value above 50 means that political developments can lead to increased oil exports, and an index value below 50 indicates that oil exports can be reduced. The further away an index value of 50 is, the higher the possibility that oil exports will change. Then it is also very likely that this can affect the oil price. The entire theoretical target range is between 0 and 100. In practice, a global index value usually swings around 50 and stays in the range of 40 to 60.
The fluctuations in oil exports are an important factor in global oil price formation. Therefore the PRIX can identify the potential trajectories of the international oil price. But not only political risks, but also other factors can influence the supply / demand balance on the global oil market and thus contribute to the formation of oil prices. The index does not predict the price of oil because it does not cover economic and technological developments, but it can serve as a component in forecasting oil price formation.
The index was first published in January 2015. It has been updated quarterly since then and is publicly available through the index website and Twitter feed. The PRIX Index is independent and no institution, company or government owns the index.
Web links
Individual evidence
- ↑ Quantifying political risk. In: ogfj.com. Retrieved December 8, 2015 .
- ^ Todd Coyne: Nuclear Negotiations, Restructuring at Chevron and a New Political Risk Index for Oil Markets. (No longer available online.) In: Alberta Oil Magazine. Archived from the original on December 20, 2015 ; Retrieved December 8, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ PRIX index Q3 indicates rising oil exports (). In: Scandinavian Oil-Gas Magazine. Retrieved December 8, 2015 .
- ↑ Bassam Fattouh: An Anatomy of the Crude Oil Pricing System. (PDF) Retrieved December 8, 2015 .
- ^ A Detailed Analysis Into the Fundamental Factors Affecting Crude Oil Prices. (PDF) (No longer available online.) Archived from the original on November 17, 2015 ; Retrieved December 8, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ^ PRIX index. In: prixindex.net. Retrieved December 8, 2015 (American English).
