Risk diffusion of international oil trade cuts: A network-based dynamics model

Abstract

International trade relations between countries have enabled the integration of global oil trade while also creating a platform for the risk diffusion of oil supply cuts. The global energy supply shortages sparked by the Covid-19 pandemic has made the problem even more pronounced. This study develops a network-based dynamics model based on the modified bootstrap percolation theory to simulate the cascading diffusion of oil supply shortages. We assess the destructive effects of exporting countries’ cuts in oil exports on global oil trade relations and the vulnerability of importing countries when they encounter oil supply shortages. The cascading diffusion of oil supply breakdown occurs less frequently from 2015 to 2019, proving that the entire network’s antirisk capacity strengthens over time. The coronavirus pandemic has impaired the robustness of the oil trade network in 2020. OPEC’s export influence has continued to decline in recent years. The diversified evolution of the oil supply is conducive to the stability of the oil trade economy. This paper analyzes the risk propagation mechanism in the global oil trade and conducts a case study. The results have a specific early warning effect on regional oil supply risks.