Management of risk in fluctuation of oil price in Iran

Dehghani, Toraj

Management of risk in fluctuation of oil price in Iran

Document Type : Original Article

Author

Toraj Dehghani

PhD student in Petroleum Economics and Resources, Mazandaran University

Abstract

The price of crude oil is affected by different factors, and it fluctuates a lot, that produce risk of the price .Therefore risk management is a complex process and includes identification, evaluation, selection of optimum method, planning for execution and supervising the activities. Risk coverage is one of the strategies for management of risk. This in itself needs financial tools. Most businessmen in world oil market use these tools to avoid the effects of price fluctuation. This paper deals with risk coverage strategies in relation to future contracts for Iranian crude oil. At first the aim is to cover the risk will be set forth & then by estimating the number of optimum future contracts, the coverage rate in two forms of static &dynamic is estimated and finally for selecting the best type of contract &module, statistical, economic & econometric method have been used.
The results have shown that, using future contract, reduces the risk fluctuation by 80 to 96 percent, and efficiency of contract is increased by their duration as a result ,future contract with four months duration is identified best for reduction of risk. Also static coverage rate for its optimizing effect has given a better result.

Keywords

Risk Management

Future Contact

BV-GARCH Module

Oil Price Fluctuation

Oil Revenues

منابع

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