Does COVID-19 effects the United States crude oil imports price?

Abstract

Introduction. The outbreak of the new coronavirus (COVID-19) crisis monopolizes these days the worldwide public agendas. The COVID-19 pandemic makes fear and uncertainty, defeat the world economy and swelling the financial markets instability. The coronavirus pandemic has led the global economy to slam the brakes, leading to an extremely sharp drop in demand for oil. It has created a massive oil glut and raised concerns about the lack of physical storage space for it. Materials and Methods. The autoregressive distributed lag (ARDL) model has been used for decades to study the correlation between variables using a single equation time series. The ARDL model is one of the most common dynamic unrestricted models in econometric literature. In this model, the dependent variable is expressed by the lag and current values of independent and its own lag value. This paper analyzed the effect of COVID-19 pandemic on the United States (US) Crude oil imports prices, using daily data for the period December 31, 2019 to March 21, 2020. Using the ADF test for stationary and bounds testing approach to cointegration, developed within an ARDL model. Results. Finding of the study showed that the total death, have significant consequence on the crude oil price, the adverse effect shows, if 1 percent increase in total death leads to decrease the crude oil -0.001 percent. The total cases are also negative effect the crude oil price, mean one percent increase in the COVID-19 which lead to decrease crude oil price -10.23. Discussion and Conclusion. The contuse increasing of COVID-19 pandemic generates shock waves on the crude oil markets, as well as in the real economy of US and also in the world. The deepness of the new economic recession will depend on the policy reaction to the coronavirus. This research paper analyzes how the COVID-19 total death and total cases effect the US crude oil price. The results of the study show that the world COVID-19 total death is significant impact on the crude oil price, if one percent increase in the total death in the world which lead decrees the crude oil price. The total cases of COVID-19 also have negative and significant effects the crude oil price.