Oil Price Changes Research Articles

The impact of external shocks on economic development in Iraq for the period 1980-2020 using the (NARDL) model

The results of estimating the (NARDL) model showed the negative and positive effects of the variables of oil prices and inflation on foreign trade, as positive changes in oil prices have a positive and significant effect on trade, while negative changes in oil prices can have a negative effect on trade, but they have a significant effect only when 10% significance level The model estimation results showed that a favorable shock in crude oil prices of 1% would lead to a decrease in gross domestic product (GDP) by 1.152%, a decrease in unemployment by 0.3112%, a decrease in public expenditures by 0.4631%, and an increase in foreign trade by 5.8935%. The results also showed that the occurrence of a shock Favorable inflation of 1% leads to an increase in output by 0.6534% and a decrease in unemployment by 0.013%. The Iraqi economy is a rentier economy and the oil sector dominates the total value of the gross domestic product. It suffers from structural imbalances due to weak policies and programs taken by the government. As a result, it faced many external shocks, the effects of which were reflected in economic development

Assessment of exchange rate determination in a mono-resource economy: A case of Nigeria

<p style="text-align:justify"><span style="font-size:16px"><span style="font-family:Times New Roman,Times,serif"><span dir="ltr" lang="EN-US"><span style="color:black">This study examined the determinants of the exchange rate in a mono-resource economy, during the period of currency and oil price fall in Nigeria. The aim of the study is to ascertain the potentiality of economic diversification (non-oil export) in saving the falling value of the domestic currency, as well as, its stability. The study employed the use of monthly data from the Central Bank of Nigeria and Nigeria National Petroleum Corporation from January 2008 to December 2020 using the ARDL and NARDL models to achieve the stated objectives. In the literature, several empirical studies analyzed the relationship between exchange rates, oil price, and oil export and came to the logical conclusion that a rise in the price of oil would bring about a rise in the exchange rate, all things being equal while the reverse is the case. To add to the existing body of knowledge this study did not only look at the relationship between the variables but also examined the determinants of the exchange rate in a mono-resource economy and ascertained the potentiality of economic diversification in bringing succor to the falling exchange rate in the midst of falling oil price. The NARDL result corroborates the findings of previous studies on the relationship between exchange rate, oil price, and the performance of non-oil export. It maintains that positive changes in oil prices would lead to the appreciation of domestic currency while negative changes in oil prices would lead to the depreciation of the domestic currency. With this analysis, the study recommends the diversification of the economy and revitalization of the non-oil sector. Since import proves to have a negative impact on the exchange rate, the revitalization of the non-oil sector stimulates domestic consumption and thus reduces import bills which raise the demand for the dollar and weakens the naira.</span></span></span></span></p>

Sensitivity to changes in oil prices, tax returns and the cross-section of stock returns: The present situation for net-oil exporting economies

This study investigates the sensitivity of stock returns to changes in oil prices and tax returns in net-oil exporting economies, focusing on the Gulf Cooperation Council (GCC) countries from March 30, 2003 to March 30, 2022. The problem statement addresses the challenge of understanding the interplay between oil price fluctuations, tax policies, and stock market dynamics in these economies, which are heavily reliant on oil revenues. The aim of the study is to provide insights into how variations in oil prices and tax returns impact the cross-section of stock returns in the GCC region. The objectives include analyzing the econometric relationships between oil prices, tax policies, and stock market performance using an appropriate econometric model. The results reveal a significant sensitivity of stock returns to changes in oil prices and tax returns in the GCC countries during the specified period. The econometric model employed indicates strong correlations between fluctuations in oil prices, tax policies, and stock market movements, highlighting the intricate connections between these variables. Moreover, the study identifies specific sectors within the stock market that are particularly sensitive to oil price changes and tax policy adjustments. Policymakers in the GCC countries can use these insights to design more effective fiscal and economic policies aimed at enhancing market stability and investor confidence amidst dynamic oil market conditions.

How do households cope during aggregate shocks? Evidence from the 2009–2015 oil crisis in Nigeria

The effect of global oil price fluctuations on households' costs of living in Nigeria is examined. We extend the Aggregate Demand/Supply (AD/AS) model by incorporating aggregate shock and idiosyncratic risk with cross-sectional heterogeneity in households' distributions and consumption substitution dynamics. Results from our model show that while positive oil prices reflect higher output, whether growth results from inflation or income-level growth remains unclear ―demand-side inflation will raise price levels, amplify budget constraints and ultimately lower welfare. For the empirical analysis, we use oil prices between 2009 and 2015 and micro-level data from the Nigerian General Household Survey (GHS) collected between 2010 and 2016 in Nigeria. In support, we show that increasing oil prices leads to greater consumption. However, the effect varies heterogeneously ―reflecting households' location and consumption substitution dynamics, adjustments in household size, and labor supply are some coping responses to oil price changes.

Nexus Between Oil, Gold Price and Dxy Index on Indonesian Stock Market During Geopolitical Events (2022 – 2024)

Objective: The aim of this study is to observe the impact of oil, gold, and the DXY index on the Indonesian stock market during geopolitical events in 2022-2024. Theoretical Framework: Rising political tensions also have a major impact on global currencies, financial market and commodity market. This event lead to uncertainty which increasing the investment risk. Hence, geopolitical events could affect stock return in capital market. Method: The data used consists of daily Jakarta Composite Index (JCI) closing data, WTI daily closing prices, gold daily closing prices, and DXY closing data from 24 February 2022 – 31 December 2022 and 14 April 2024 – 30 April 2024. Data obtained form Bloomberg. The analysis technique used was GARCH (1.1). Results and Discussion: The results showed that WTI oil price changes had significant positive effects on stock return in Indonesia. However, gold price changes had insignificant positive effects on stock returns in Indonesia during geopolitical events, while the DXY Index had insignificant, negative effects. Research Implications: Investors and traders in Indonesia Stock Exchange should consider oil price changes for investing in stocks during geopolitical events. Originality/Value: This study contributes to literatures regarding the stock market turbulence during geopolitical events and its effect toward stock return. The relevance and value of this research are evidenced by the insignificanct effect of gold and DXY toward stock return, while WTI has significant effect toward stock return.

The Impact of Oil Price Changes, Economic Growth, Financial Development and Trade on Iraq’s Economy

The Impact of Oil Price Changes, Economic Growth, Financial Development and Trade on Iraq’s Economy

Betting on war? Oil prices, stock returns, and extreme geopolitical events

We show that the ability of oil price changes to predict stock returns is limited to periods of extreme geopolitical unrest. Four events generate most of the predictability: the 1973 Arab-Israel war, the 1986 OPEC collapse, the 1990/91 Persian gulf war, and the 2003 invasion of Iraq. We also find that a market-timing trading strategy based on oil price changes typically generates insignificant abnormal returns, contradicting previously published results. Our findings serve as an example of how a significant predictor in a time series forecasting regression may not be a useful or profitable market-timing signal.

Oil price volatility and changes in corporate debt: An empirical study in the Indian landscape

Changes in crude oil prices affect corporate debt position. This study investigates the association between changes in debt and crude oil price volatility in nonfinancial, BG, and SA firms in India. We use financial variables, crude oil prices, and macroeconomics data from 2004 to 2020 for 16,452 firm-years and this study employs unbalanced panel data and utilizes different empirical methodologies, including the generalised method of moments (GMM) estimator, to test the stated hypotheses. The results reveal that the debt position and the crude oil price volatility significantly have different effects on business group (BG) and stand-alone (SA) firms. Crude oil price volatility is positively related to changes in the debt position. The effects of the financial variables also significantly differ for the BG and SA firms. Finally, firms change their debt position in the positive or negative direction based on the fluctuations in crude oil prices. Policy implications have also been provided.

Oil Price Fluctuation and their Impact on the Macroeconomic Variables: The Case of Kuwait

The fluctuations in the international prices of crude oil have been a major concern for many economies who depend mainly on oil exports. Oil price shocks are a major disturbance for the economies of oil producing countries. This study investigates the impact of oil price shocks on selected macroeconomic variables in Kuwait using secondary data covering the period of 2001 to 2022. The study adopted the Vector autoregression (VAR) method to analyze the response of Kuwait macroeconomic variables to shocks in oil prices. Oil price in the study is considered in 2 categories: the linear oil price and the non-linear oil price (positive and negative changes in oil price). Based on the findings, it is observed that oil price shocks significantly impact macroeconomic variables in Kuwait. It is found that positive changes in oil prices have a more positive and significant impact on the macroeconomic variables compared to the negative changes in oil price. It is however concluded that there is a need for more policy developments to better harness periods of positive oil price experiences, and develop hedging risk framework for periods of negative changes in oil price in order to curb the impact of oil price shocks on Kuwait’s macroeconomy.

Macroeconomic Impacts of Oil Price Shocks: Evidence from Iraq by Using Vector Autoregressive Model

Based on a VAR framework, Granger Causality Tests, Impulse Response Function and Variance Decomposition analysis on the annual data from 1970 to 2021, This study aims to demonstrate the effect of oil price fluctuations on GDP, imports, international reserves, and exports in Iraq. The Granger causality results demonstrated a unidirectional connection moving from oil price to imports, exports, international reserves, and GDP, this is an inevitable result because oil prices are determined in the international markets according to specific factors that do not include local economic variables. The variance decomposition result indicated that oil price changes are an important source of variation in the studied variables. Finally, the results of the impulse response function indicated that fluctuations in oil prices significantly impact GDP, exports, imports, and international reserves in Iraq. Therefore, we suggest that economic policymakers work seriously to develop practical plans to diversify the Iraqi economy instead of relying too heavily on oil revenues, which are characterized by sharp and continuous volatility, to avoid the negative effects of these fluctuations on the main macroeconomic variables in Iraq.

Oil and Food Prices in Bangladesh: A Linear and Non-Linear ARDL Analysis

Fluctuations in the oil price profoundly impact many other prices in the economy, as oil is used to produce numerous goods and services. While literature is ample regarding the linear relationship between crude oil prices and food prices, academic discussion on the presence of non-linear relationships is relatively evolving. This paper strives to explore the existence of both linear and non-linear relationships between crude oil price and food price in Bangladesh by employing the autoregressive distributed lag (ARDL) model and the non-linear autoregressive distributed lag (NARDL) model, respectively. The ARDL model indicates that the crude oil price has a linear and positive impact on food price inflation in Bangladesh. The NARDL model finds no asymmetric relationship between the two variables in the long run. As a result, in the long run, the response of food price inflation in Bangladesh is the same whether oil prices increase or decrease. However, the NARDL model reveals that the change in oil prices asymmetrically impacts food price inflation only in the short run. These findings are essential for further study, and the results can be used for policymaking to ensure food security in Bangladesh.

International Linkages of Inflation‐Output Dynamics: Fresh GVAR Evidence from Pakistan and Its Trading Partners

The key purpose of this study is to explore the relationship between inflation and output dynamics in a global macroeconomic framework by utilising time‐series data from Pakistan and thirty‐two trading partners which account for around 95 per cent of foreign trade of Pakistan, over the period 1979Q2–2016Q4. By featuring the GVAR approach, this paper empirically examined the international linkages to account for cross‐country inflationary spillovers. The findings show that both foreign and global variables jointly and significantly matter for the inflation‐output relationship in developing economies, in general and, in particular, in the economy of Pakistan. The findings from general impulse response functions (GIRF) reveal that shocks to the US real output, oil prices and food prices are transmitted and settled quickly, and put forward a significant impact on real GDP and inflation in Pakistan and its trading partner economies. Inflation in Pakistan is driven more strongly by the global changes in oil and food prices than GDP. For monetary policy formulation, the central bank should take into account developments in inflation‐output dynamics of Pakistan's major trading partners.

Analyzing the Impact of Crude Oil Price Changes on Airlines' Stock Prices in the Indian Aviation Industry

The study examined the connection between airline stock prices and crude oil prices. It focused on five airlines - Air India,, IndiGo, Jet Lite,,Jet Airways, and Spice Jet - as well as three types of crude oil markets based on their market capitalization: WTI-West Texas Intermediate and Texas Light Sweet; Brent-North Sea Brent Crude; and Dubai-Dubai Crude. The results revealed that changes in crude oil prices influenced most of the airline stock returns. Specifically, Air India, IndiGo, Jet Airways, and Spice Jet showed significant correlations between their stock returns and crude oil prices during the study period from January 1,,2007 to November 30, 2018. These findings have implications for individual investors, institutional investors, and policymakers.

Uncovering the dynamic relationship between oil prices and external trade in OECD countries

This study investigates the impact of oil price fluctuations on trade, including the exports and imports of goods and services, fuel exports and fuel imports. For this purpose, we employed a Pooled Mean Group estimator on the autoregressive distributed lag (PMG–ARDL) model. This approach helps investigate the short-run and long-run effects of oil price changes on trade indicators considering the difference of convergence path across countries while handling problems of endogeneity. This study examines a strongly balanced panel dataset of 34 OECD countries over the 26 years from 1995 to 2020. Overall, the findings indicate that rising oil prices have a positive and significant impact on all trade indicators. The results are consistent with the immediate and persistent influence of oil price fluctuations on trade. Nevertheless, the effects of other explanatory variables on trade vary across different trade indicators and in the short and long runs. From a policy perspective, it is vital to comprehend the appropriate policy responses to oil price changes to achieve the expected trade outcomes.

Nonlinear impact of climate transition risks on green stock performance: Perspectives from multiscale and lag effects

This study presents a novel examination of how climate transition risks, temperature variances, and the international crude oil market influence green stock performance in China. Utilizing signal decomposition and distributed lag nonlinear regression models on data from July 29, 2015, to June 30, 2022, we uncover a unique nonlinear and time-lagged relationship between climate risks and green stock returns. Our findings reveal that green stocks respond differently to climate and oil price changes under various market conditions, with long-term trends more affected than short-term movements. This highlights the critical role of temporal factors in financial analyses of climate-related risks and suggests that climate policies and market dynamics significantly shape investment and corporate strategies over time. The study offers fresh insights into green stock dynamics, stressing the need for nuanced understanding in financial decision-making amidst climate change and market volatility.

Research on Global Olive Oil Price Forecasting

Nowadays, commodity price forecasting has become a popular topic. The study of olive oil prices can inform pricing strategies and price positioning of olive oil. How to analyze the range and magnitude of price changes, as well as how consumers are likely to react to changes in olive oil prices, are important factors that will influence the future price trend of olive oil. Therefore, it is crucial for companies to set prices correctly. Since the ARIMA model has high forecasting accuracy and fewer parameters, the model has been chosen for most similar forecasts and is also chosen as a forecasting tool in this paper. The forecast results show that international olive oil prices will remain wildly high in the future, but the rate of increase will slow down. Since the data of recent years are heavily affected by COVID-19, the outliers of recent years also need to be dealt with if more accurate forecasts are needed, which is an unresolved issue in this paper. This paper also attempts to make some policy recommendations based on previous studies to moderate the rapid increase in olive oil prices.

Oil price uncertainty and excess value of diversification

PurposeThis study examines the value implications of oil price uncertainty for investors in diversified firms using a sample of 922 USA firms from 2001 to 2019.Design/methodology/approachOur study employs a panel dataset to examine the value implications of oil price uncertainty for diversified firm investors. We consider several alternative specifications to account for unobserved factors and measurement errors that could potentially bias our results. In particular, we use alternative measures of the excess value of diversified firms and oil price uncertainty, additional control variables, fixed-effects models, the Oster test, impact threshold for confounding variable (ITCV) analysis, two-stage least square instrumental variable (2SLS-IV) analysis and the system-GMM model.FindingsWe find that the excess value of diversified firms, relative to a benchmark portfolio of single-segment firms, increases with high oil price uncertainty. The impact of oil price uncertainty is asymmetric, as corporate diversification is value-increasing for diversified firm investors only when the volatility is due to positive oil price changes and amidst supply-driven oil price shocks. The excess value increases irrespective of diversified firms’ financial constraints and oil usage. Diversified firms become conservative in their internal capital allocations with high oil price uncertainty. Such conservatism is value-increasing for diversified firm investors, as it supports higher performance in response to oil price uncertainty.Originality/valueOur study has three important implications: first, they are relevant to investors in understanding the portfolio value implications of oil price uncertainty. Second, they are helpful for firm managers while comprehending the value-relevant implications of internal capital allocations. Finally, our findings are policy relevant in the context of the future of diversified firms in developed markets.

The impact of oil shocks on the stock market

This paper investigates the reaction of real stock returns and their volatility in the three main euro area economies (France, Germany and Italy), the U.K. and the U.S. to oil price changes caused by different shocks in the supply-side and demand-side of the global crude oil market, including the shock on the demand for oil inventories. Our findings suggest that the impact of oil supply and aggregate demand shocks on real stock returns and volatility are not altered when oil inventories are explicitly considered in the modeling of global crude oil market. However, the effects of oil-specific demand shocks on real stock returns are modified by the inclusion of oil inventories in the model, stressing the importance of the uncertainty channel in the link between the oil and stock markets. Finally, oil inventory shocks have a negative impact at medium time horizons on real stock returns, as the surge in the price of oil causes depletion of inventories.

Seeking a shock haven: Hedging extreme upward oil price changes

Crude oil is prone to large upward price shocks, creating challenges for personal and corporate budgeting and the economy more broadly. In this paper, we systematically assess a range of possible assets which might function as shock havens against large oil price shocks. Empirical tests uncover a rich set of assets which act both as hedges and shock havens, including precious metals, soft commodities and, with less consistency, currencies. The range of possible hedges is extensive, marked by a positive correlation with oil returns on average. Gold, silver, platinum, corn, and wheat are shown to provide consistent shock haven properties across various specifications, including those surrounding the large oil price changes observed during the COVID-19 Pandemic and following the invasion of Ukraine.

Disturbing Effects of Global Oil Price Changes: Case of Azerbaijan

General topic in this paper is the role of oil industry in global economy and the result of changing oil prices on economic variables in Azerbaijan. The major aim is to analyze the effects of crude oil price changes on Azerbaijan economy in order to measure how changes in oil prices affect its basic economic variables. At the beginning, a general outlook on oil industry will be given and the main oil exporting economies will be analized. However, main focus will be on the structure of Azerbaijan’s economy and it will examine the example of Azerbaijan as a transition economy where oil and gas production and exports have steadily increased from the mid ‘90s. Many critical oil and gas extraction projects have been implemented; while the oil and gas sector's dominance in the economy poses a number of threats to the balanced development of the country's economy. It will show how the economy of Azerbaijan was affected after the oil crisis, such as other developing countries that mainly depending on oil and petroleum products. For this purpose, VEC Model has been applied, consdering Azerbaijan Statistic Data and analized the effects of oil price fluctuations on its economic variables parallel with the oil industry. The main findings indicate that Azerbaijan's economy is strongly dependent on resource exports, which produce high growth rates when commodity prices are favorable, but end up with lower macroeconomic performance when global oil prices fall. It is clear that the main income of Azerbaijan comes from oil and oil products, so the export of oil will have a high impact on the saving level of the population. At the time of high revenues come from export and the low exchange rate of the foreign currency in Azerbaijan has also led to the low cost of imported goods. As well demonstrated in the research, Azerbaijan economy has been widely exposed to major crude oil price distortions. It can be said that in order to avoid increasing overdependence on oil earnings, diversifying the economy should be a top priority.