Oil Exchange Research Articles

Improved water and ions dynamics in a clayey soil amended with different types of agro-industrial waste biochar

Biochar is a beneficial amendment for fine-textured soils. In addition, the interaction of biochar particles with soil components influences the dynamics of water and ions, which is particularly important to remediate salt-affected soils. We investigated the effect of sugarcane bagasse (SB), orange bagasse (OB), and corncobs (CB) biochar on water movement and ion leaching in clayey soil. Non-amended soil (CT) column and soil amended with gypsum (CTG) served as controls. Water infiltration, water flow rate, cumulative leached cations, anions, and exchangeable cations (Ca2+, Mg2+, K+, and Na+) were determined. Biochar increased the water infiltration and water flow rate by 80% and 71%, respectively. The SB and CB treatments increased the ion removal from the soil by 48%, whereas the OB increased the removal by 19%. The OB´s lower surface area and water holding capacity likely influenced its performance. Biochar reduced the Ca2+ and Mg2+ concentration on the soil exchange complex by 44% and 76%, respectively, and increased K+ by 233%. However, the most exciting result was the reduction of exchangeable Na+, 90% in the SB and CB treatments and 50% in the OB treatment. Considering that a high concentration of Na+ on the exchange complex contributes to soil structural degradation, biochar application, especially SB and CB, can potentially improve soil quality and mitigate salt-affected soils.

Conditional Dynamic Dependence and Risk Spillover between Crude Oil Prices and Foreign Exchange Rates: New Evidence from a Dynamic Factor Copula Model

This paper proposes a dynamic factor model to accurately characterize the dynamic dependence and risk spillovers between the crude oil and exchange rate returns of oil-trading countries from 2000–2020, conditional on the common factors. To this end, we first identify the common factors related to returns of crude oil prices and exchange rates from 14 typical oil-trading countries. Then, we use the AR-GARCH model to filter the respective idiosyncratic factors and conduct a comparative study of conditional dynamic dependence between the crude oil and exchange rate returns of oil importers and exporters. Finally, we combine the dynamic factor copula model with the CoVaR method to measure the conditional risk spillover effect between crude oil and exchange rate markets. The empirical study indicates that the classical factor analysis can be used to precisely identify the common factors related to both financial markets, with the similar trend of macro-economic indicators. Furthermore, the factor copula model can capture the dynamic structure between crude oil and exchange rate markets more accurately than the traditional Copula–GARCH model. Specifically, the idiosyncratic factors related to each return series still have a significant impact on the dependence between the crude oil and exchange rate returns of oil importers, while the common factors have played an important role in the relationship of oil exporters’ exchange rates with crude oil prices. Finally, the crude oil market has enjoyed a relative risk premium to the exchange rate markets of oil-trading countries. However, there is almost no conditional risk spillover from the corresponding exchange rates to the crude oil prices. Finally, we discuss the implications for investors, policymakers and respective exchange rate regulators from oil-trading countries with further insights from the macro-economic perspective.

World Oil Prices and Exchange Rates on Islamic Banking Risks

Islamic banking risks are influenced by many factors, facing internal and external banking risks. In this study, the internal banking risks are represented by Credit risk as measured by Non-Performing Financing (NPF) and liquidity risks as measured by Financing to Deposit Ratio (FDR). At the same time, world oil prices and exchange rates represent the external banking risks. World oil price data is obtained from OPEC Price, and exchange rate data is obtained from the Pacific Exchange Rate Service. While the data from NPF and FDR is obtained from BI Statistics of Sharia Banking. The results of this study found that world oil prices have a significant effect on credit risk and liquidity risk in Islamic banking. In contrast, the exchange rate only has a significant effect on credit risk in Islamic banking.

The Dynamic Effects of Oil Price Shocks on Exchange Rates—From a Time-Varying Perspective

This study investigates the time-varying effects of three types of oil price shocks (oil demand, supply, and risk shock) on exchange rates by applying the time-varying parameter structural vector autoregression stochastic volatility (TVP-SVAR-SV) model. Through examining the impulse response of exchange rates to oil price shocks at different lag periods and time points, this paper contributes to the existing literature on the dynamic relationship between oil shocks and exchange rates. From the response at different lag periods, we find that oil price shocks have a significant time-varying impact on the exchange rate, among which oil demand shock has the most significant effect. The response of the exchange rate market to oil price shock shows an obvious short-term time-varying effect and is positive and negative alternately, with a certain periodicity. From the response at different time points, the time-varying effect of oil price shock on exchange rates is related to external shock, and is more intense during the global economic and political turmoil. This is the first empirical study using a novel method to examine the time-varying effects of oil price shock from different sources on exchange rates, providing investors and policy makers assistance to manage foreign exchange during global turmoil periods.

Oil and GCC foreign exchange forward markets: A wavelet analysis

We examine the relationship between oil as a major export for the member countries of the Gulf Cooperation Council (GCC) and the forward levels of all GCC currencies using wavelet analysis. We find that oil and GCC forward markets have significant but weak relationships at high frequencies. We also find evidence of significant and strong relationships at low frequencies during periods of low oil prices. However, no noticeable relationship is observed during periods of rising oil prices. This could be explained by the significant concern about the negative effects of the decline in oil prices, especially with regard to liquidity and public finances.

IMPACT OF COVID-19 PANDEMIC ON OIL PRICES IN SOUTH ASIA: PANEL DATA ANALYSIS

The COVID-19 pandemic has exerted an unprecedented impact on the oil prices across the globe and it is inevitable to capture the variations in oil prices caused by the COVID-19 pandemic. The current study objects to explore the effect of COVID-19 on oil prices in South Asian countries (Pakistan, India, Sri Lanka, and Bangladesh) by applying the Fixed-Effect Model (FEM) to the panel data from January 2019 to June 2021. The study has applied the Levin-Lin Chu test, Hardri LM test, and Im-Pesaran-Shin test to check the stationary properties of the panel data. The study has also applied the diagnostic tests i.e. White test, the Breush-Pagan test, the Breush-Pagan LM test, the Durban-Watson test, and the Hausman test. The results of all diagnostic tests authenticate the estimates of the Fixed-Effect Model (FEM). Findings of the study exhibit that the COVID-19 pandemic, natural gas production, and oil demand exert a negative impact on the oil price, whereas, exchange rate and oil supply have a positive impact on oil prices in South Asian countries during the stipulated period. The study has suggested that the authorities of South Asian authorities should devise such type of policies that could defeat the COVID-19 pandemic to cope with the hike in oil prices. Keywords: COVID-19 pandemic; Oil Prices; Fixed-Effect-Model; South Asia.

Using the Multiple Linear Regression Method for CO2 Flooding Evaluation in the Daqing Oilfield

CO2 flooding and burial efficiency can be improved by establishing a standard for screening suitable CO2 flooding reservoirs for the Daqing Oilfield. Moreover, the influencing factors of CO2 flooding can be classified into geological factors, fluid properties, and development factors. An evaluation index system and hierarchical structure are created based on the importance of multiple factors. The subjective analysis error of human beings is quite large when establishing the evaluation index system, especially in the fitting curves that are drawn by different analysts. Based on the geological characteristics of block Bei14 in the Daqing Oilfield, a typical CMG model is presented in this article. A total of 15 factors in the 72 models are used as independent variables, and the recovery factor is used as a dependent variable for multiple linear regression calculations. In addition to sensitivity tests based on how much significance is indicated by the t value in the results, a unique result can be calculated using standard statistical methods when analyzing the calculation results of the multiple linear regression model. The results of the screening standard evaluation system are consistent with the production history of the oilfield based on the mathematical understanding of multiple factors of CO2 flooding. Around the high-score well group, oil saturation decreases significantly, and the cumulative production is generally higher than that of the low-score well group. The calculation results of block Bei 14 show that 74% of well groups have an evaluation value greater than 0.50, and 72% of well groups have an annual oil exchange ratio above 40%, which means that over 70% of well groups can benefit from CO2 flooding. Thus, CO2 flooding can be applied in the Daqing Oilfield, and multiple linear regression can provide effective guidance for the Daqing Oilfield’s development.

Asymmetric volatility spillovers and dynamic correlations between crude oil price, exchange rate and gold price in BRICS

Driven by the importance of oil price, exchange rate and gold price in the world economy, we investigate asymmetric volatility spillovers and dynamic correlations between crude oil price, exchange rate and gold price in BRICS by estimating an asymmetric VAR-BEKK(DCC)-GARCH model using the daily data from August 2005 to March 2020. The empirical results indicate that gold is the ultimate recipient of volatility spillovers between the three markets in Brazil and India and the nexus between China's exchange rate market and crude oil market. Volatility spillovers between the three markets in Russia formed a bidirectional closed transmission path. As an emerging economy, South Africa had a weak link between its exchange rate and gold markets with the crude oil market. Furthermore, volatility spillovers exhibited self-evident asymmetry and dynamic correlations between the markets were unstable. The results are conducive to investors, policymakers, and researchers.

Dynamic Shocks of Crude Oil Price and Exchange Rate on Food Prices in Emerging Countries of Southeast Asia: A Panel Vector Autoregression Model

This paper empirically analyzes food price responses to shocks from crude oil price and exchange rate volatility in five emerging Southeast Asian nations between 2000 and 2020 using impulse response functions and variance decomposition analysis of the dynamic panel Vector Autoregression approach. Based on the findings of the impulse response functions analysis, food prices respond positively to both oil price and exchange rate shocks. Meanwhile, the results of variance decomposition analysis show that food prices account for a significant portion of volatility in its own shock. The contribution of oil price shock to food price volatility is found to be greater than the contribution of exchange rate shock. Hence, the study recommends that policymakers in these nations should be vigilant about the impacts of oil price and exchange rate shocks on food prices since these factors may undermine price stability and exacerbate food security.

Heterogeneity dependence between oil prices and exchange rate: Evidence from a parametric test of Granger causality in quantiles

This paper re-examines the nexus between crude oil price and exchange rate by investigating their heterogeneity dependence structure within the framework of Granger causality in quantiles for a sample of developed and emerging economies (namely UK, Canada, Brazil, Russia, Mexico, Norway, India, Japan, South Africa, South Korea and European Union (EU)). The results indicate no distinct causality between the crude oil price changes and the real exchange rate returns for all countries besides Russia at the median of the conditional distribution. Besides, the crude oil price changes influence the exchange rate returns in all countries, except Norway and EU, particularly around the tails of the conditional distributions of exchange rate returns. This suggests that the oil price changes influence the real exchange rate returns when the real exchange rate returns are either in extreme appreciation or depreciation. Moreover, the crude oil price movement can be explained by the exchange rate returns for most oil importers only when the crude oil market is bearish or bullish. By contrast, the real exchange rate can permanently affect the crude oil price for most oil-importing countries irrespective of the crude oil market's state. Finally, our findings provide an essential reference for managing the extreme risk dependence between the exchange rate market and the crude oil market.

Nexus of energy and food nutrition prices in oil importing and exporting countries: A panel VAR model

This study explores the relationship between energy and food nutrition prices through food calorie, fat, protein, and crude oil price links in the case of eight net oil importing (U.S., Korea, China, and Japan) and exporting (Canada, Saudi Arabia, United Arab Emirate, and Iran) countries. For this purpose, we use a Panel-VAR model with data for the 1974–2018 period. The results show that the effects of oil prices shocks on food nutrition prices are different in the two groups of countries. These effects, in oil importing countries, are initially declining and then adjusts over several periods while they are incremental and meaningful for oil exporting countries. In addition, the effects of real gross domestic product (GDP) and exchange rates on food nutrition prices are statistically significant in the oil exporting countries, while they have no direct effect on the food calorie and fat prices in the net oil importing countries. These results suggest that crude oil price, income, and exchange rate policies play an effective role in controlling hunger levels and improving food security in oil-exporting countries.

Modern global oil market under stress: system dynamics and scenarios

Modelling techniques developed 40 years ago to gain insight into the issues of energy supply security remain powerful even as the focus of energy technology policy analysis has shifted to consider new problems and to use research methods more closely linked to pressing environmental challenges. Dynamic modelling continues to be of merit and indeed it has the potential to provide helpful perspectives on contemporary problems such as climate change and the transition to net-zero greenhouse gas emissions. This study seeks to help revive system dynamics (SD) modelling of the global oil market. The SD-based analysis used in this paper facilitates a rational representation of physical stocks and flows as well as causal linkages that drive decision making in the global oil system. The use of SD provides insights (intuitive and counter-intuitive) into the macro-level non-linear dynamics of global oil exchanges and permits assessment of the potential impacts of future changes in system behaviour. The model exhibits damped oscillations in oil prices, broadly consistent with real market behaviours. The results further illustrate the resilience of market dynamics in the phase of extreme supply-side shocks and reveal the ability of SD to simulate and model such effects even beyond the point of market failure.

Oil prices, exchange rates and interest rates

There has been much interest in the relationship between the price of crude oil, the value of the U.S. dollar, and the U.S. interest rate since the 1980s. For example, the sustained surge in the real price of oil in the 2000s is often attributed to the declining real value of the U.S. dollar as well as low U.S. real interest rates, along with a surge in global real economic activity. Quantifying these effects one at a time is difficult not only because of the close relationship between the interest rate and the exchange rate, but also because demand and supply shocks in the oil market in turn may affect the real value of the dollar and real interest rates. We propose a novel identification strategy for disentangling the causal effects of traditional oil demand and oil supply shocks from the effects of exogenous variation in the U.S. real interest rate and in the real value of the U.S. dollar. Our approach exploits a combination of sign and zero restrictions and narrative restrictions motivated by economic theory and extraneous evidence. We empirically evaluate popular views about the role of exogenous real exchange rate shocks in driving the real price of oil, and we examine the extent to which shocks in the global oil market drive the U.S. real exchange rate and U.S. real interest rates. Our evidence for the first time provides direct empirical support for theoretical models of the link between these variables.

Pandemic COVID-19 and Macroeconomic Indicators: A Study of the Structural Factors Exacerbating Palestine's Economic Crisis

This paper explored and examined the impact of the (COVID-19) pandemic for the following period from March 2020 to February 2022 on selected macroeconomic indicators and variables in Palestine, as well as its economic impact and structural factors that exacerbate the coronavirus (COVID-19) pandemic issue, are examined in this paper. This study uses data from the Palestine Monetary Authority (PMA) and the World Bank to assess the link between the exchange rate, crude oil price, inflation, and economic growth in Palestine using Johansen-Juselius multivariate cointegration techniques. The findings show that a combination of falling oil prices, high inflation, exchange rate, and spillovers from the (COVID-19) pandemic outbreak triggered the economic downturn in Palestine, which not only reduced demand for oil products but also halted economic activity when social distancing policies were implemented. The government responded to the situation by assisting companies and a limited number of homes afflicted by the coronavirus (COVID-19) pandemic. As a result, the report recommends that the government invest inadequate digital infrastructure to ease the shift from face-to-face business operations to "digital or online" business activities, which can assist the digital economy to expand.

Time-frequency effect of crude oil and exchange rates on stock markets in BRICS countries: Evidence from wavelet quantile regression analysis

This study examines the effects of oil prices and exchange rates on stock market returns in BRICS countries (Brazil, Russia, China, India and South Africa) from a time–frequency perspective over the period 2009–2020. We use wavelet decomposition series to develop a threshold rolling window quantile regression to detect time–frequency effects at various scales. The empirical results are as follows. First, our findings confirm that the effects of both crude oil prices and exchange rates on BRICS stock returns are asymmetric. Positive shocks of crude oil have a greater impact on a bull market, whereas negative shocks have a greater impact on a bear market. Second, there is a short-term enhancement effect of crude oil and exchange rate on BRICS stock markets. In addition, volatility in the macro financial environment also exacerbates the impacts of oil prices and exchange rates on the stock market, and these fluctuations are heterogeneous. Overall, these findings provide useful insights for international investors and policy makers.

Exchange Rate Volatility and Oil Prices in South Africa

The study examines the oil prices and exchange rate volatilities in South Africa. The study employs monthly time series data spanning for the period from 1960 M1 to 2021M11 using data collected from the SARB. The study employs a TGARCH model to analyse the volatilities between oil prices and exchange rate. The study found that oil prices have a negative statistically significant impact on the exchange rates in South Africa. The study therefore recommends that the monetary authorities must monitor oil prices as they have an ability to cause exchange rate volatilities.

The effects of COVID-19 on the interrelationship among oil prices, stock prices and exchange rates in selected oil exporting economies

This paper re-examines the performances of stock prices, oil prices and exchange rates in twelve oil exporting countries amidst the ravaging consequences of the ongoing worldwide coronavirus pandemic. Consequently, the study adopted a panel Vector Autoregressive (pVAR) model which applied data from the pre- and post-COVID-19 periods. Contrary to the pre-COVID-19 pandemic period, the pVAR Granger causality test indicates that the stock market can as well affect the exchange rate market, though positively. Furthermore, the Impulse response functions (IRFs) shows that a shock to crude oil prices provokes a negative response by exchange rates in the post-COVID-19 pandemic era only. The Forecast Error Variance Decomposition (FEVD) estimates that such innovations to crude oil prices account for the varying fluctuations in exchange rates and stock returns at different periods, but is neither influenced by the stock market activities nor the exchange rate market in the post-COVID-19 pandemic era. This suggests that before COVID-19, the different markets in the selected oil producing economies were only affected by their market fundamentals and dynamics only, but this changed with the plummeting oil prices in the COVID-19 pandemic era. The development of vaccines and the immediate vaccination of the world people will ease the lockdowns and increase the demand for crude oil by the high oil importing countries. With the improved earnings from this, and the associated appreciation of the local currencies against the US dollars, the capital market activities of these net oil exporting countries improve. Policy makers and investors should consider the dynamics in the oil market while making decisions.

Shocks and volatility transmission between oil price and Nigeria's exchange rate.

The study examined shock and volatility transmission between oil price and exchange rate markets using daily data covering the period from 23rd October 2009 to 30th November 2020. The contributions of the paper include (i) implementation of VAR-AGARCH model to capture spillover effect of shock and volatility; (ii) examining the nature of shock impact in oil price and exchange rate market; (iii) adopting of two measured of oil price (WTI and Brent); (iv) employing two measures of the exchange rate (USD/Naira and effective/Naira). The study revealed that past own shocks and volatilities significantly contribute to current volatilities in exchange rate and oil price markets. Also, there is bidirectional shock and volatility spillover between the exchange rate (USD/Naira and effective/Naira) and WTI oil price markets. There were bidirectional shock and volatility spillover between USD/Naira and Brent oil price and unidirectional shock and volatility from Brent oil price to effective exchange rate market. We found asymmetric shocks impacting exchange rates and WTI oil price while symmetric shock was observed in Brent oil price. Including innovation in oil price is essential in exchange rate policy formulation and modelling exchange rate shock and volatility.

Oil Price, Exchange Rate and Asymmetric Adjustment of Nigeria's Bilateral Trade

Motivated by the persistent rise in bilateral trade imbalance in Nigeria, this paper empirically examines whether Nigeria's four trading partners (China, India, the UK and the US) respond asymmetrically to changes in the oil price and exchange rate using a nonlinear autoregressive distributed lag model over the period from January 1999 to December 2019. Interestingly, we find that oil price increase and decrease influence Nigeria's trade balance with four trading partners asymmetrically. Further evidence indicates that oil price increases predominantly exert greater influence than decreases. Furthermore, Nigeria's trade balances with India and the UK in the long run and the US in the short run significantly respond asymmetrically to changes in exchange rate. In addition the result establishes significant evidence of the J-curve pattern in the response of Nigeria's trade balance with the UK to differences in exchange rate.

Experimental Analysis and Performance Investigation of Immiscible Super-Critical CO2 Flooding Processes in Tight Oil Reservoir

CO2 flooding, a promising technique of enhanced oil recovery, is widely used for its capability of boosting oil recovery, and reducing greenhouse gas emissions. In this study, the oil displacement performance of supercritical CO2 is tested in laboratory under immiscible flooding. The results show that: Supercritical CO2 improves oil recovery, by virtue of its low viscosity, high diffusivity, and easy dissolution. With the same pore volume (PV), supercritical CO2 flooding significantly boosted the oil recovery factor. The factor reached the maximum, when almost 1.5PV of CO2 was injected. As CO2 moved from the gas phase to the supercritical state, the oil displacement efficiency increased by 10%. To obtain the same oil recovery factor, non-supercritical flooding needed to inject more CO2 than supercritical flooding. Light hydrocarbon components (C1-7) in crude oil were gradually extracted before CO2 breakthrough, while heavy hydrocarbon components (C7+) were extracted mainly after CO2 breakthrough. In addition, supercritical CO2 flooding extracted more intermediate hydrocarbons than critical CO2 flooding. To sum up, supercritical flooding outperforms non-supercritical flooding in injection performance, oil displacement efficiency, and oil exchange rate.