Oil Price Decreases Research Articles

Soybean overweight shock (SOS): The impact of trade liberalization in China on overweight prevalence

This study investigates the overweight effect of the soybean import shock (referred to as the soybean overweight shock or “SOS”) on China, the largest importer of soybeans worldwide. By using China's soybean import liberalization in 1996 as a natural experiment, which involved the removal of soybean tariff rate quota (TRQ) policy and a reduction in soybean import tariffs from 114% to 3%, we found significant SOS effects. The soybean import shock can account for 10.76% of the observed increase in overweight probability between 1989 and 2006. Mechanism analysis finds that the exposure to the soybean import shock leads to a significant decrease in the market price of soybean oil and an increase in soybean oil consumption, it also increases the likelihood of being overweight through dining out, eating food prepared outside, and eating fried foods. Additionally, we discovered stronger SOS effects in urban residents, females and individuals with relatively lower family income.

The External Financial Crises and Their Role in The Economic Growth Fluctuations in Iraq During the Period (2004-2021)

Financial crises are a concerning and essential phenomenon due to their severe and dangerous negative impact on global stability. These crises have also spread to developing and advanced countries due to their financial and economic openness. The adverse effects of financial crises have had repercussions on global oil prices, which in turn affected economic growth in Iraq, given its dependence on the oil sector. The main objective of the research was to examine the impact of the global financial crisis on economic growth in Iraq. The research utilized deductive methodology and descriptive analysis as the appropriate approach to achieve the research goal and understand the effect of global financial crises on economic growth. The research begins with the hypothesis that the economic growth in Iraq is affected by global financial crises through oil prices in international markets. The researcher utilizes specific indicators of the Iraqi economy, including oil prices, public revenues, public expenditures, and public debt, to demonstrate the impact of global financial crises on these indicators and how this impact reflects on economic growth in Iraq, represented by the gross domestic product (GDP). The research findings highlight several impacts on the Iraqi economy due to various financial crises. These include the 2009 mortgage crisis, which decreased crude oil prices in the global market due to the global economic recession. Additionally, the financial crisis since the second half of 2014 was caused by a decline in crude oil prices due to sluggish global economic growth. Furthermore, the COVID-19 crisis at the end of 2019 had significant financial consequences, accompanied by decreased oil prices. It is evident that the Iraqi economy is directly and unexpectedly affected by financial crises through the oil markets, as the country heavily relies on oil revenues, which constitute a large proportion of the GDP. Paper: Research paper

Oil and Food Price Before and During COVID-19 Pandemic in Nigeria: A Non-Linear ARDL Approach

Abstract This paper analyzes the relationship between food and oil prices in Nigeria before and during the COVID-19 pandemic, using monthly data from January 2018 to December 2021. The ARDL and NARDL models are applied to estimate the symmetry and asymmetric relationship that exists in food price behavior. The NARDL confirms the presence of asymmetries, and the bound test affirms the co-integration and long-run relationship among the variables. In the long run, there is a significant positive relation between oil price increases and food prices, but the long-run impact of oil price reductions on food prices is not significant. In the short run, only increases in oil prices exert a significant influence on food prices, while decreases in oil prices do not. Furthermore, the COVID-19 period exerts a positive and significant impact on food prices, while COVID-19 cases do not influence food prices in Nigeria.

Determinants of the competitiveness of world palm oil exports: A cointegration analysis

The purpose of this research is to determine the impact of international palm oil prices, prices of its substitute and complementary goods, and the exchange rate on the competitiveness of 30 palm oil exporting countries over the period from 2011 to 2019, using monthly data. The symmetric comparative advantage index was estimated, and a convergence effect was found, whereby emerging countries exhibited greater specialization than industrialized countries. Unit root and cointegration tests were applied, in addition to FMOLS and DOLS methods. The analysis revealed that decreases in palm and vegetable oil prices, coupled with an increase in the exchange rate and prices of soybeans and biodiesel, enhanced the competitiveness of palm oil exports.

Oil price shocks pass‐through to domestic prices in Nigeria

AbstractThe study investigated the potential non‐linear impacts of fluctuations in oil prices on domestic prices in Nigeria. Utilising the non‐linear autoregressive distributed lag (NARDL) model, the study revealed the presence of asymmetry in the behaviour of domestic prices. Both forms of oil price shocks were observed to have a negative influence on domestic prices in the short term, with only positive oil price shocks demonstrating statistical significance. However, in the long run, a distinct pattern emerged where a decrease in oil prices significantly affected domestic prices. Additionally, analysis of VAR impulse response showed a consistently negative reaction of domestic prices to oil price shocks, falling below the steady‐state equilibrium. The study concluded that changes in oil prices, in conjunction with other macroeconomic variables, affected the prices of domestic goods in Nigeria, whether in the short or long term. This underscored the complexity of Nigeria's economic landscape. Consequently, it is advisable to prudently invest excess revenue generated from rising oil prices to mitigate the adverse impacts of negative oil shocks on the economy.

Changing determinant driver and oil volatility forecasting: A comprehensive analysis

Academic research relies on exogenous drivers to enhance the accuracy of forecasting oil volatility. Following the relevant literature, this study collects 62 exogenous drivers that reflect the movements of oil demand, oil supply, oil inventory, macroeconomic fundamentals, financial indicators, and measures of uncertainty. Our empirical results indicate that dimension reduction regressions, especially principal component analysis regression (PCA), successfully predict both WTI and Brent oil volatility at the one-month ahead forecast horizon. Shrinkage methods, on the other hand, outperform their counterparts for medium- and long-term forecast horizons. Furthermore, the unsupervised learning method (PCA) achieves superior forecasting performance during periods of oil price decrease, whereas supervised learning methods (i.e., shrinkage methods) significantly improve volatility accuracy. Additionally, the empirical results reveal that movements in the Kilian index, World industrial production index, global economic conditions index, U.S. steel production, Chicago Fed national activity index, capacity utilization for manufacturing, U.S. default yield spread, and MSCI emerging market index have a significant impact on oil volatility.

Nexus between Green Investment, Fiscal Policy, Environmental Tax, Energy Price, Natural Resources, and Clean Energy—A Step towards Sustainable Development by Fostering Clean Energy Inclusion

This study aims to examine the relationship between green investment (GI), fiscal policy (FP), environmental tax (ET), energy price (EP), natural resource rent (NRR), and the consumption of clean energy (CE) to promote sustainable development in Cambodia for the period 1990–2021. The study implemented linear and nonlinear frameworks to document explanatory variables’ potential effects on clean energy consumption in the long and short run. The research findings demonstrate a robust and favorable connection between GI, FP, ET and CE, both in the long term and short term. An augmentation in GI results in the establishment of sustainable growth in the utilization of renewable energy, thereby underscoring the significance of green initiatives in advancing clean energy technologies. Fiscal policies, encompassing tax incentives and subsidies, exert a substantial and enduring influence on expanding renewable energy sources. Implementing environmental taxes catalyzes the demand for clean energy, significantly preserving the environment and promoting sustainable energy practices. Furthermore, the study illuminates the inverse correlation between oil prices and REC. Adopting renewable energy sources may face obstacles in the form of elevated oil prices, as conventional energy sources maintain a cost advantage. On the contrary, decreased oil prices and natural resource rent incentivize transitioning towards using clean energy. Countries that heavily depend on the export of natural resources may display a reduced inclination to invest in renewable energy, commonly called the “resource curse” phenomenon. This study provides valuable insights into the intricate interplay of multiple factors that influence renewable energy consumption and contribute to sustainable development. Policymakers, businesses, and researchers can employ these findings to develop productive strategies that advance the inclusion of clean energy, tackle potential challenges, and cultivate a more environmentally friendly and sustainable future.

Capital Market Volatility During Crises: Oil Price Insights, VIX Index, and Gold Price Analysis

Abstract The study aims to investigate capital market volatility during crises, exploring the relationships between three key financial indicators: oil prices, the VIX index, and gold prices, using monthly data covering the period from January 2013 to May 2023, based on the Granger causality approach and the impulse response function testing empirically the existence of the long-run relationship using Johansen multivariate approach and the estimation of the VAR/VECM model. By analysing their interdependencies, the research sheds light on how these indicators respond to economic turbulence. The study employs robust econometric methods to investigate causal relationships and predictive patterns, providing valuable insights for investors, policymakers, and analysts navigating uncertain financial landscapes. The findings reveal nuanced dynamics, such as the momentum in oil prices, the inverse relationship between oil prices and the VIX index, and a significant Granger causality relationship running from the VIX index to oil and gold prices. Furthermore, based on the impulse response patterns, the shock in the VIX index caused a notable oil price decrease in the second quarter after the shock, followed by oscillations. Gold prices exhibit a minor initial decline after the VIX shock, with no lasting effects.

Determinant of Capital Adequacy Ratio (CAR) in Indonesia

This study aims to examine and analyze the effect of the Bond Index, Stock Market Liquidity, NIM, LDR, NPL, Bank Inefficiency, Previous CAR, Economic Growth, Fed Fund Rate, and Oil Price on Capital Adequacy Ratio. The sample used in this research is conventional banks listed on the Indonesia Stock Exchange for the period 2010 – 2020, which totals 23 banks. The independent variables in this study are Bond Index, Stock Market Liquidity, NIM, LDR, NPL, Bank Inefficiency, Previous CAR, Economic Growth, Fed Fund Rate, Oil Price, and the dependent variable Capital Adequacy Ratio. The sampling method is the census. The data analysis method uses the panel data regression method which examines and analyzes the influence of the independent variables Bond Index, Stock Market Liquidity, NIM, LDR, NPL, Bank Inefficiency, Previous CAR, Economic Growth, Fed Fund Rate, and Oil Price on the dependent variable Capital Adequacy Ratio. Bank Inefficiency, Bank Risk, and GDP Growth have a negative and significant effect on Capital Adequacy Ratio (CAR). Previous CAR, Fed Fund Rates, and Oil Prices have a positive effect on CAR. Bond Index, Loan Deposit Ratio (LDR), and Non-Performing Loans (NPL) do not affect the Capital Adequacy Ratio (CAR). Banks can increase CAR when the Fed Rate and Oil Price decrease. Banking can increase CAR when Bank Inefficiency, Bank Risk, and GDP Growth decrease.

An application of copulas to OPEC’s changing influence on fossil fuel prices

This work examines how the dependence structures between energy futures asset prices differ in two periods identified before and after the 2008 global financial crisis. These two periods were characterized by a difference in the number of extraordinary meetings of OPEC countries organized to announce a change of oil production. In the period immediately following the global financial crisis, the decrease in oil prices and oil and gas demand forced OPEC countries to make frequent adjustments to the production of oil, while, since the first quarter of 2010, the recovery led to more regular meetings, with only three organized extraordinary meetings. We propose to use a copula model to study how the dependence structure among energy prices changed among the two periods. The use of copula models allows to introduce flexible and realistic models for the marginal time series; once marginal parameters are estimated, the estimates are used to fit several copula models for all asset combinations. Model selection techniques based on information criteria are implemented to choose the best models both for the univariate asset prices series and for the distribution of co-movements. The changes in the dependence structure of couple of assets are investigated through copula functionals and their uncertainty estimated through a bootstrapping method. We find the strength of dependence between asset combinations considerably differ between the two periods, showing a significant decrease for all the pairs of assets.

Hubungan inflasi, minyak dunia, dan sektor transportasi dan logistik

In addition to impacting world oil prices, global inflation conditions at the beginning of 2023 also triggered changes in the national inflation rate and tended to have an impact on the transportation and logistics index. This study aims to examine the relationship between national inflation, world oil, and transportation and logistics index. This study finds that neither the rate of return of world oil prices nor the national inflation rate has an insignificant relationship with the transportation and logistics index. These results imply that increases or decreases in world oil prices tend not to be followed by fluctuations in the transportation and logistics index. At the same time, these results also imply that changes in the national inflation rate will not be accompanied by changes in the transportation and logistics index.

Analisis Profitabilitas Agroindustri Minyak Nilam di Desa Bambadaru Kecamatan Tobadak Kabupaten Mamuju Tengah

The purpose of this research was to determine the profitability of patchouli oil agroindustry in Bambadaru Village, Tobadaka District, Central Mamuju Regency, and to determine the sensitivity to changes in patchouli oil prices sold there. The sample taken above in this research was carried out intentionally and deliberately, namely the owner of a patchouli oil refining business in Bambadaruu Village, Tobadak District, Central Mamuju Regency. BEP (Break Even Point), sensitivity, and profitability analysis of the data used in this research is intended to analyze production costs and profitability. The results of this resesrch indicate that the patchouli oil agro-industry business in Bambadaru Village, Tobadak District, Central Mamuju Regency will break even or return to normal operations in units of BEP and BEP rupiah. So the number of BEP units used from the results of the analysis is 17 kg with a total of around Rp. 6,665,845. And for the sensitivity of the decrease in the selling price of patchouli oil by 20%, it can affect the profitability of the patchouli oil agro-industry business in Bambadaru Village, Tobadak District, Central Mamuju Regency, where the profits obtained by business owners have decreased. Which initially has a profit of Rp. 52,861,784 to Rp. 36.002.216

Hidden causality between oil prices and exchange rates

This work investigates the interactions between oil prices and exchange rates of 6 typical oil importers (China, Japan, and India) and exporters (Canada, Russia, and Saudi Arabia) from 2006 to 2022. We employ a novel method to capture their causal interactions, namely pattern causality, and compare the results to that based on the volatility spillover method. The empirical analysis supports most existing findings that oil prices are bidirectional correlated with exchange rates. However, unlike previous studies that only investigate positive and negative causalities, we highlight dark causality as a more complex interaction. Moreover, dark causality suggests that successive increases (decreases) in oil prices tend to drive the exchange rates of oil exporters to act in an oscillatory manner rather than in a purely positive or opposite trend, and vice versa. Furthermore, we also reveal that dark causality shows dominance during crises, e.g., the global financial crisis, the European debt crisis, the epidemic of COVID-19, and the Russia-Ukraine conflict. Revealing three types of causalities between oil prices and exchange rates helps policymakers develop more diversified macroeconomic policies. Moreover, the newly identified dark causality can be a useful indicator for investors to risk management.

Oil-supply news and dynamics of exchange rates in oil-exporting countries

Most sub-Saharan African (SSA) countries have benefited and also suffered from the consequences of oil price fluctuations. The suffering of these nations has reverberated especially from the influencing power of exchange rate volatility, high inflation as well as an adverse impact on other macroeconomic variables. Therefore, this study estimated the magnitude of the effects of oil supply news shocks on the dynamics of exchange rates and also, the impact of exchange rate dynamics on oil supply news shocks in oil-exporting countries of West Africa (WA) countries. We implemented a panel non-linear autoregressive distributed lag (P-NARDL) model. The finding of the study indicates that rising fluctuations in oil prices caused by Organization of the Petroleum Exporting Countries (OPEC) news of oil supply disruption significantly induce exchange rate devaluation. Unambiguously, a 1 percent increase in oil supply news shocks stimulated 1.59432 percent appreciation while the same-size decrease in oil prices led to 0.86397 percent devaluation. These validate asymmetrical presence in exchange rate behaviour concerning the oil market. Also, we found 1.09452 percent devaluation and 0.25371 percent appreciation in the exchange rates of oil-producing African nations following a 1 percent rise and fall in inflation rates indicating a symmetric relationship between inflation rate and exchange rates. Oil-producing countries of WA should utilize foreign exchange (FX) from oil export to acquire capital-intensive projects.

Oil Price and Stock Market Nexus in Nigeria: An Asymmetric Cointegration Based on Non-Linear Ardl Approach

This paper examined the asymmetric nexus between oil price and stock prices in Nigeria using nonlinear autoregressive distributed lag model (NARDL) to capture both long-run and short-run asymmetric relations. To achieve this, monthly time series data from 2014m1 to 2023m6 were gathered from the Central Bank of Nigeria (CBN) and the Nigeria Exchange Group (NGX). The estimation results confirmed the existence of both long-run and short-run asymmetry behaviour of stock prices in Nigeria. Precisely, in the long-run, interest rate, exchange rate and oil price increase tend to increase stock price levels in Nigeria. Similarity, in the short-run, only oil price increase seems to increase stock prices while oil price decrease seems to decrease stock prices in Nigeria. Furthermore, the empirical findings from asymmetric effect show that negative changes in exchange rate fell sharply due to decrease in oil price which further translate to stock price, suggesting the existence of feed backs from oil to stock markets. The paper recommends that investors should invest in Nigerian stock market in that a hike in oil price leads to appreciation in domestic currency, which translate to appreciation in stock price in Nigeria and vice versa. This suggests that investment in stock market can be used as a tool to ease the domestic currency pressure to a sustainable level. Hence, the need to maintain stable oil prices cannot be overstressed.

Построение модели GVAR для российской экономики

The relationship between the economies of various countries and their dependence on the world markets indicate that for econometric analysis of the impact of external shocks on a particular economy, it is necessary to use a model of the global economy. The aim of this paper is to build a global vector autoregression model (GVAR), including Russia as one of the regions, and to obtain the impact of some external economic shocks on Russian macroeconomic indicators. We build a model that includes 41 of the world's major economies, including Russia, and the oil market. The special features of our model are structural shifts in the dynamics of Russian output and the new specification of oil supply and oil demand. Impulse response functions are used to obtain quantitative estimates. In this paper, we analyze the reaction of outputs, oil production volumes and oil prices in response to the output shocks of China and the United States. In response to the negative shock of output in the world's leading economies, outputs in the rest of the world declined for at least the first year after the shock. There was also a significant decline in oil prices and no significant change in oil production volumes in most countries. In addition, as part of the conditional forecast, we estimated the impact of the decline in global demand due to the Covid-19 pandemic on the Russian GDP as 1,3% drop. The rest of the de cline in Russian GDP can be attributed to the internal effects of the pandemic (lockdown). We also obtained a scenario forecast of the dynamics of Russian GDP depending on a decrease in trade and Russian oil price discount, within which the fall in Russian output could reach 3.3% in 2022.

Effect of International Crude Oil Prices on Nigeria’s Gross Domestic Product from (1985-2020)

The aim of this study is to investigate the effect of oil price and its volatility on the development of Nigeria’s economy; this is due to the decline of the Nigerian economy as a result of decrease in daily oil production and plum-meting oil prices. The study assesses both long-and short-term effects of oil price volatility on real GDP in Nigeria. To achieve the basic objective of this research and to ascertain a comprehensive and robust outcome, the study adopted secondary data such as Nigeria’s Real GDP, Crude Oil Price, Real Exchange Rate and Foreign Direct Investment (FDI) that covers the period 1985 to 2020. In the analysis of data collected the research adopts Autoregressive Distributed Lag (ARDL) estimation technique. From the analysis, it can be deduced that in the short run, there is a positive impact of oil price on real GDP which is statistically significant at one percent level. As real exchange rate rises by one percent, the real GDP rises by 1.528 per cent, all things being equal. While the long run, the effect is positive and statistically significant measuring 14.67 positive effects on the economy. It also revealed that while oil price volatility affects economic development positively in the short term, its effect in the long term is not statistically significant. Findings from the study revealed that crude prices have a positive effect on GDP in Nigeria. Therefore, sustaining an equilibrium tempo of crude oil supply in Nigeria is crucial while the international community should allow the forces of demand and supply to play its role. This is because the rate of supply has effect on price and frequent change in price means high volatility. The article is structured as follows: introduction, literature review, methodology, data analysis, discussion of findings and recommendations.

Challenges of increased usage of plastic during COVID and Possible Solutions

The Coronavirus Disease (COVID-19) pandemic spreaded at the beginning of 2020, which brings lots of changes to our living habits The massive use of plastic products such as gloves, masks, protective clothing, and test kits put pressure on plastic waste treatment. There is not much research focused on plastic wastes that are generated during COVID and their treatment methods. This article discusses plastic waste in two aspects. The first is the damage of untreated plastic to the environment. The other is the analysis of current treatment methods for plastic and their advantage and disadvantages. The commonly used processes, including the incineration and landfilled processes, are discussed. Both incineration and landfill severely impact the environment and need to be transformed into a better process. Furthermore, new emerging technology such as pyrolysis and gasification can be developed into better thermal treatment methods because they have cleaner gas production and limit the production of toxic chemicals. Recycling is considered a favorable technique to treat plastic waste before COVID. However, during COVID, the preference for using plastic and the decrease in oil prices made this technology less competitive. Recommendations on the current plastic waste problem are made, including input gas cleaning systems such as carbon dioxide scrubbers, regulation of disposal of plastic, scale-up of pyrolysis and gasification process, and promoting the usage of biodegradable plastic.

The complementary effects of environmental policy and oil prices on innovation: evidence from OECD countries

ABSTRACT This paper examines the single and the joint influence of environmental policy stringency and oil prices on green innovation, admitting the possibility of different magnitudes of the response of innovation depending upon whether oil prices are increasing or decreasing, and accounting for endogeneity of policies. A panel data set of OECD countries is used over the period 1990–2016. Results suggest that increasing the stringency of environmental regulation can, beyond inducing green innovation, shield the effect of oil prices on innovation. In addition, a more stringent environmental policy reduces the asymmetric response of innovation when oil price increases or decreases. Thus, environmental policy and oil prices can be complements when inducing green innovation. Exploiting these complementarities requires an interdependent use of environmental and energy policies, through dynamic adjustments of subsidies and taxes on oil prices alongside reasonable levels of stringency in environmental policy.

Exploring the Asymmetrical Influence of Economic Growth, Oil Price, Consumer Price Index and Industrial Production on the Trade Deficit in China

The present study intends to scrutinize the asymmetrical influence of economic growth, industrial production, CPI (consumer price index) and oil price on the trade deficit for the People’s Republic of China’s economy. The Toda–Yamamoto causality, non-linear ARDL method, and quarterly data for 1995Q1 to 2021Q4 have been utilized to investigate the results. The estimated results confirm the uni-directional causality and presence of non-linear co-integration among variables under discussion. However, bound test analysis also reveals the long-run asymmetrical association among TD (trade deficit), IP (industrial production), oil price, and GDP growth, but not the CPI (consumer price index). Further, long-run asymmetrical outcomes highlight that a decrease (increase) in industrial production and an increase (decrease) in oil price and GDP growth rate increase (decrease) the trade deficit. Short-run asymmetrical outcomes reveal a similar trend to the long run, but the impact of all variables in the short run is insignificant, which means that linkages between the trade deficit and the explanatory variables are a long-run phenomenon in People’s Republic of China. Thus, in terms of policy, to reduce the trade deficit, it is necessary to focus on attaining standardized GDP growth, increasing industrial-sector production using advanced technology, and replacing oil-using energy sources with green technology (solar panels, wind farm energy).