How often do oil prices and tanker freight rates depend on global uncertainty?

Abstract

The wavelet analysis is used to explore global economic policy uncertainty (GEPU) role in the correlation between oil prices (OP) and the Baltic Dirty Tanker Index (BDTI). It explores that OP is leading BDTI in the short run. Similarly, GEPU has a significant impact on OP in the medium run, while a long-term correlation is observed between GEPU and BDTI. However, the correlation between OP and BDTI changes from short to medium in the presence of GEPU, which implies that uncertainty makes the correlation more visible The outcomes are supported by the Homogeneous model, which explains that OP and BDTI have close integration and GPEU is a leading factor. The tanker industry performance depends on precise information about the oil market movement and GEPU. The pertinent stakeholders and policymakers must monitor OP changes which can help to mitigate the possible GEPU and conflicts. A harmonized global maritime security system requires to be installed and upgraded to minimize security threats.