Oil Price Growth Research Articles

The role of corruption in the oil price–growth relationship: Insights from oil-rich economies

The role of corruption in the oil price–growth relationship: Insights from oil-rich economies

Oil Price and Long-run Economic Growth in Oil-importing Developing Countries

The recent spikes in oil prices are a significant setback for the world economy, which has already faced multiple challenges due to the COVID-19 pandemic. This is particularly concerning for developing countries as maintaining a sustained growth in real GDP is crucial for lifting their population out of poverty. While the short-run negative macroeconomic effects of a spike in oil prices are well established in the context of the developed world, the long-run growth effect has received little attention, especially in developing countries. Using the World Bank's development indicators database covering the period 1990 to 2020, this study aims to investigate the oil price-growth nexus in low and middle-income net oil-importing countries to shed light on how oil price increases could be a challenge for sustainable development. Specifically, we first set up a theoretical model to establish the relationship between growth in output per capita and oil price. Following the traditional growth regression approaches, we empirically estimate the causal effect of growth in oil prices on the economic growth of 65 net oil-importing developing countries using fixed effect panel IV regression methods. The empirical results confirm statistically significant negative effects of oil prices, indicating that a higher oil price reduces long-run economic growth in oil-importing developing countries. Our results on the other determinants of growth are consistent with the existing empirical growth literature. Oil-importing developing countries, therefore, must allocate resources towards alternative domestic energy sources, in addition to pursuing fuel efficiency and conservation strategies, to mitigate the negative effects of oil price fluctuations on their long-run economic output and uphold sustainable development.

The tail risk of crude oil Price_Based on EPU and geopolitical risk perspective

This study investigates the conditional prediction of crude oil price growth rates as a function of geopolitical risk (GPR) and economic policy uncertainty (EPU), characterizing the extreme tail risk characteristics. Utilizing monthly data on crude oil futures price growth rates from 1997 Jan to 2022 Dec, we employ Quantile Regression and Growth at Risk models to capture the heterogeneous and asymmetric effects of GPR and EPU across different quantiles of the oil price distribution. The sample period covers major geopolitical events, economic recessions, and the emergence of new energy sources, providing a comprehensive view of the factors influencing crude oil market dynamics.The empirical findings reveal significant asymmetries in the forecast density function of crude oil price growth rates, with periodic right-skewed deviations during financial crises and epidemic situations, and prevalent left-skewed deviations during the remaining sample periods. The impact of EPU on crude oil prices is found to be more pronounced in the short to medium term, while the influence of GPR persists over a longer duration, exacerbating the upside risk of price growth. The study highlights the effectiveness of EPU and GPR in capturing the tail characteristics of crude oil price growth, offering valuable risk identification indicators for policymakers and market participants.Furthermore, the analysis uncovers the heterogeneous effects of EPU and GPR across different quantiles of the oil price distribution. The results indicate that the relationship between these uncertainty measures and crude oil prices varies depending on the market conditions and the specific quantile examined. This finding underscores the importance of considering the entire distribution of crude oil prices rather than focusing solely on the conditional mean.The study contributes to the existing literature by providing a comprehensive examination of the role of geopolitical risk and economic policy uncertainty in driving crude oil price dynamics, with a particular focus on tail risks. The findings have important implications for risk management strategies in the energy sector.By employing advanced econometric techniques and considering a wide range of geopolitical and economic factors, this study offers new insights into the complex and evolving nature of crude oil price dynamics. The results highlight the need for policymakers and market participants to consider the asymmetric and heterogeneous effects of uncertainty measures when assessing the risks and opportunities in the crude oil market.

Factors Affecting Inflation Rates in the Kingdom of Saudi Arabia: A standard study from 1980 to 2016

This study aimed at identifying the factors affecting inflation rates in the Kingdom of Saudi Arabia for the period (1980-2016). To achieve the study purpose, the researcher adopted the descriptive analytical model as it suits this phenomenon. A group of variables that are expected to affect the inflation rate in the Saudi economy is selected. These variables are: money supply growth rate, imports of GDP, oil price growth rate, rate of exchange, income growth rate interest rate on the dollar and generate price level. Besides that, a standard model was built based on a series of data of inflation determents for the Saudi economy (1980-2016). The researcher also used the EViews program to tackle the relation among the variables and to obtain the best results. The study reached the following set of results: There is a direct relation between the inflation rate and money supply growth rate, imports of GDP, and general price level. Whereas the money supply growth rate has the strongest impact on inflation followed by imports of GDP, on the other hand, there is an inverse relation with both exchange rate. Meanwhile, the rest of the variables, oil price growth rate, income growth rate, and interest rate on the dollar have no effect on the inflation rate in Saudi Arabia.

What is the role of perceived oil price shocks in inflation expectations?

Not much. We identify the perceived oil price shock, as well as perceived global demand and supply shocks, using sign restrictions in a factor-augmented vector autoregression model that includes forecasts for crude oil price growth, real GDP growth, and inflation across 84 economies. The perceived oil price shock explains only 10% of the fluctuations, on average, in global inflation expectations from January 2012 to December 2022, and accounts for an even smaller fraction during the COVID-19 pandemic. Allowing for the oil price noise shock – reflecting exogenous shifts in agents’ optimism and pessimism – does not materially change the limited pass-through of the perceived oil price shock to inflation expectations. In contrast, perceived global supply and demand shocks dominate, especially since the onset of the pandemic. Over the first eight months, professional forecasters viewed the pandemic, on net, as a negative demand shock and lowered their short-term inflation expectations. In early 2021, professionals quickly switched their views and sharply increased their inflation expectations amid burgeoning and persistent supply chain disruptions and labor constraints.

Volatilitas Imbal Hasil Saham dan Kaitannya dengan Harga Minyak Dunia (Pendekatan Model ARCH/GARCH dan VAR)

Volatility generally refers to the amount of uncertainty or risk associated with changes in a security's value. The value of a security can potentially spread over a wider range of values if it has higher volatility. This study aims to analyze the volatility of stock returns and the growth of world oil prices. The stock that the author analyzes in this scientific article is PT Pakuwon Jati Tbk. by using daily time series data from January 2 2019 to December 14 2020. The model used in this study is Autoregressive Conditional Heteroskedasticity (ARCH)/Generalized Autoregressive Conditional Heteroskedasticity (GARCH), to understand clustering volatility behavior, and Vector Autoregression ( VAR) to determine the dynamic behavior between stock returns and world oil price growth. The results of the study show that stock returns and growth in world oil prices have clustering volatility in both variables. The results of the GARCH model, on the LPwon variable, indicate that when the return variable is not influenced by any variable, the tendency for stock returns tends to decrease, in contrast to the lnbrent variable, which tends to always increase.

Impact of Sanctions and Prospects for Bugetary and Tax Policy in Russia

The implementation of the Russia fiscal policy in 2022 is taking place in the context of severe external sanctions, including the freezing of government foreign assets. As theoretical models say an increase in government spending stimulates output growth but household consumption reduces. At the same time, empirical studies of the impact of sanctions show that losses from the simultaneous application of financial sanctions, asset freezing and trade restrictions could amount to 4.0-5.0% of GDP. The state of the federal budget in the first half of 2022 remained stable due to the growth in oil prices. The growth of additional oil and gas revenues of the federal budget covered the increased non-oil and gas deficit. External sanctions and retaliatory measures from the monetary and financial authorities had a critical impact on the state of the domestic government debt market. The return to early 2022 levels came amid falling trading volumes, with no new government bond issues between late February and August 2022.

THE IMPACT OF OIL PRICES ON INVESTMENT IN CROATIA

If we look at economic growth as a function of labour and capital then, aside from the labour force, investment is a key determinant of capital accumulation and, accordingly, a prerequisite for economic growth and prosperity. During the analysed period (1996:Q1-2015:Q4) investment in Croatia demonstrated pro-cyclically behaviour but showed a higher level of fluctuation then personal consumption or GDP. The aim of the paper is to examine the influence of oil prices on investment during the analysed period using Vector Autoregression (VAR) analysis and to determine the nature of their relationship by permuting four different oil price indicators. The results indicate that investment initially react positively to the growth of oil prices after which their reaction to oil price growth becomes negative (and more pronounced than the initial positive reaction). Contribution of oil price changes to investment fluctuations were also found. Keywords: investment, oil prices

Oil Price and Macroeconomic Fundamentals in African Net Oil-Exporting Countries: Evidence from Toda–Yamamoto and Homogeneous Causality Tests

Abstract Despite the wealth of literature on the oil price growth examinations, there is a shortage of research on the causality between oil prices and various macroeconomic fundamentals with regard to the group of net oil-exporting countries in Africa. This study examines the causality between oil price volatility and macroeconomic fundamentals in net oil-exporting countries in Africa using the Toda–Yamamoto and homogeneous causality techniques to gauge the nexus in the selected countries from 1995 to 2019. Our findings from the panel causality test suggest that oil price volatility significantly Granger causes the economic growth of the selected net oil-exporting countries in Africa. However, a mixed outcome was observed for the cross-sectional analyses using the Toda–Yamamoto causality test. Hence, the study offers the need for a policy framework that would drive the output growth as oil price changes continue to threaten macroeconomic variables.

Dutch Disease Effects in the Azerbaijan Economy: Results of Multivariate Linear Ordinary Least Squares (OLS) Estimations

This paper investigates the increased role of extractive industry, particularly oil and gas, within the Dutch disease model between 2000-2018 in the Azerbaijan economy. Dutch disease phenomenon befalls when the national economy produces and exports a single commodity or a particular sector becomes the booming sector. Increased exports of particular goods and spendings of the accumulated mineral revenue appreciate the national currency, decreasing the competitiveness and thus the production or export volume of the non-booming sectors. Azerbaijan is an oil and gas-rich country which naturally actualizes the existence of Dutch disease syndrome . Therefore, the purpose of this research is to separately reveal the Dutch disease effects of resource movement and spending effects based on the theoretical frame­ work constructed from the core theory. The paper contains a comprehensive literature review and overall macroeconomic screening of the Azerbaijan economy to describe the preconditions of Dutch disease. Then, the study employs 42 multivariate linear ordinary least squares (OLS) estimations. The estimated models illustrate the presence of indirect de-industrialization (one form of resource movement effect) and the spending effect of the Dutch disease hypothesis. However, the paper does not find a direct negative influence of booming sectors on aggregated lagging (i.e., manufacturing and agriculture) and non-tradable sectors (services). Moreover, va­riables such as oil price growth rates, real effective exchange rate (REER), nominal effective exchange rate (NEER), and economic crisis periods failed to significantly explain the employment and real wages dynamics. However, these variables described certain influence channels in output and returns on capital growth rates. This paper sheds light on the interconnections between the Azerbaijan economy’s labor resources, government spending, and monetary channels. These interconnections indicate that the Dutch disease hypothesis holds true for Azerbaijan. Of the estimated OLS coefficients, 90.5% were highly stable, which suggests that the results are reliable. This study mainly tests the general theoretical expectations of the original Dutch disease model and presents a common ground to conceptualize the possible harmful effects of the booming oil and gas sectors in Azerbaijan. Any causal derivations should be handled carefully.

Accounting for the declining economic effects of oil price shocks

Many studies have concluded that the effects of oil price shocks have diminished since the mid-1980s. This paper revisits the evidence in Blanchard and Galí (2010)​. I show that the apparent instability in the oil price-macroeconomy relationship they find can be accounted for by the endogeneity of oil price changes and the lower energy share in consumption in recent decades. When these two factors are taken into account, the effects of oil price shocks on real economic activity appear to be stable over time. Nevertheless, the impact of oil prices on inflation has noticeably weakened. • Blanchard and Galí (2010) find that the impact of oil price shocks on the US economy has declined since 1984. • I replicate their key result and show that it is not driven by the persistence of oil prices or the oil price volatility. • I extend their model in two ways. First, I weight oil price growth by lagged energy share in consumption. • Second, I augment their model with a newly constructed measure of non-OECD petroleum consumption. • I show that the extended model implies stable impact of oil price shocks on US GDP and employment.

Understanding corporate debt from the oil market perspective.

We design and test the hypothesis that for energy firms' oil market activities impact capital structure. Using a unique sample of 726 energy firms from 56 countries, we find that oil market activities do influence capital structure. The speed of adjustment (SOA) to leverage when not exposed to oil market activities is between 27.5 and 66.4%. When exposed to oil price growth (market liquidity) the corresponding SOA is between 51.1 and 72.4% (40.9–76.1%). We conclude that oil price growth slows down while market liquidity improves SOA to leverage for energy firms. By comparison, using a sample of over 32,000 non-energy firms from 108 countries, we find no evidence that oil market activities dictate capital structure.

THE IMPACT OF INNOVATION, KNOWLEDGE SPILLOVERS AND OIL PRICES ON ECONOMIC GROWTH OF THE REGIONS OF KAZAKHSTAN

The study of impact of innovation and diffusion of knowledge for economic growth of European regions and other developed countries is increasingly attracting attention of scientists. Along with this, there are many studies for impact of world economic growth of oil prices. At the same time, there is an insufficient attention to joint assessment and comparative analysis of effectiveness of these internal and external growth factors. Moreover, this important issue has been studing a little in relation to countries with economies in transition. This paper is devoted to the study of the impact of innovation and the knowledge spillover in combination with an assessment of the impact of fluctuations in the world oil price on economic growth of regions of Kazakhstan. Catching-up development models are constructed according to annual data from 2005 to 2016 for 16 regions of Kazakhstan. Calculations based on the panel data with fixed effects have confirmed that costs of technological innovations, their spillovers between regions, healthcare costs, as well as the growth rate of the world oil price positively influenced for economic growth in regions. Moreover, socio-economic conditions reinforced their positive impact on growth. It has established that changes in the world oil price and costs of technological innovations and their spillovers between regions effects at the same order, and impact of health care costs and socio-economic conditions on regional growth is noticeably weaker. The results of the study confirm that for innovation activity is essential for the economic growth of the oil exporting country as well. Keywords: oil prices, R&D, innovations, knowledge spillovers, regional growth, Kazakhstan JEL Classifications: C33, O11, O32, O40 DOI: https://doi.org/10.32479/ijeep.9034

STUDI EMPIRIS PENGARUH HARGA MINYAK MENTAH DUNIA DAN VARIABEL MONETER TERHADAP PEREKONOMIAN INDONESIA PERIODE 1996-2018

Oil is one of the strategic energies in the economy. The fluctuations will always be a favorite barometer of economists and world leaders. Therefore, this study aims to convert deeper into the world and monetary variables towards the Indonesian economy for the period 1996-2018. This study uses secondary data from the IMF and BPS. Variables are economic growth, oil prices, and interest rates. Perform the analysis carried out, namely descriptive analysis using Images and inferential analysis with Vector Error Correction Mechanism (VECM). The results of this study are common in the context of economic growth. Meanwhile, there is no economic growth. Meanwhile, at that time economic growth was influenced by economic growth in the first quarter, second and third quarter, growth in oil prices in the previous quarter, and economic growth in the previous quarter. The average value of ECT produced is negative and significant.

Вплив державного резерву на формування цінових коливань в економіці на ринку нафтопродуктів

Currently, the issues of oil and petroleum products are very important both in theoretical and practical terms. Of particular importance is the issue of completeness and compliance with the current market conditions of the existing in Ukraine order of formation of prices for petroleum domestic production. Problems of pricing have always been of interest to foreign scientists such as Kaufman, Gatelli, Marne, Rögnner, Zavada, among Russian scientists – V. Yesipov, V. Tarasevich, who investigated methods of pricing on the basis of the cost method and its adaptation to the conditions of a market economy. Among the domestic scientists, the theoretical foundations of pricing were reflected in the scientific works of I. Lukinov, Y. Plotkina, P. Belenky, A. Melnyk and others who investigated the above problem primarily in the context of the management of costs and results and state regulation, and in particular - in the market of petroleum products. The rapid growth of oil prices in the world market leads to the need to determine the causes and factors that caused it. Problems of pricing on hydrocarbons are lately relevant both in the domestic market and in foreign ones. This is determined by the special role that oil plays in the world, and the scarcity of hydrocarbon resources, their exhaustiveness. Constant fluctuations in prices on world oil markets complicate the possibility of their forecasting with the purpose of reserving funds in the budget or other state funds to stabilize prices. As a result of the analysis of the oil and oil products market, it was determined that: the tendency of crude oil trade in the Ukrainian market has been caused by the reduction of oil refining volumes, which, in turn, is caused by the exclusion from the domestic market of domestic fuel imports; the main reason for the unsatisfactory competitiveness of domestic motor fuel is its quality, which does not meet the requirements of modern standards and the price not corresponding to it; low quality motor fuel of domestic production is determined by the prevailing use for its production of low-quality (high-sulfur) import oil; in general, the competitiveness of the domestic oil refining industry is considered low.

Is it possible to accurately forecast the evolution of Brent crude oil prices? An answer based on parametric and nonparametric forecasting methods

Can we accurately predict the Brent oil price? If so, which forecasting method can provide the most accurate forecasts? To unravel these questions, we aim at predicting the weekly Brent oil price growth rate by using several forecasting methods that are based on different approaches. Basically, we assess and compare the out-of-sample performances of linear parametric models (the ARIMA, the ARFIMA and the autoregressive model), a nonlinear parametric model (the GARCH-in-Mean model) and different nonparametric data-driven methods (a nonlinear autoregressive artificial neural network, genetic programming and the nearest-neighbor method). The results obtained show that (1) all methods are capable of predicting accurately both the value and the directional change in the Brent oil price, (2) there are no significant forecasting differences among the methods and (3) the volatility of the series could be an important factor to enhance our predictive ability.

Macroeconomic Determinants of Consumer Lending in Saudi Arabia

This paper empirically investigates the macroeconomic variables that influence consumer lending in Saudi Arabia using quarterly data for the period of 1996-2017. The Johansen and Juselius (1990) multivariate cointegration test were used to examine the impact of banks liquidity, interest rate, oil prices and GDP per capita on consumer lending. The test results indicate the existence of the long-term relationship and the empirical results show that consumer lending is positively influenced by a change in banks liquidity, growth in oil prices and GDP per capita. Contrary to expectation, the interest rate was positive and significant. The modified Granger causality test in Error Correction Model framework reports bidirectional causality from banks liquidity to consumer lending and vice versa, while unidirectional causality from GDP per capita and interest rate to consumer lending. The main finding of the paper is to encourage the monetary authority to allow for a gradual phase-out of restrictions on the number of personal loans as well as enhancing consumer protection mechanism to prohibit unfair contractual terms in the agreements.

Oil Price Volatility & Macroeconomic Fluctuations: Recent Evidence from Mexico

This research intends to identify the relationships between growth and key macroeconomic variables in Mexico, with a primary focus on the fluctuations in crude oil prices. Using a multiple linear regression model, the paper examines the impact of variables such as the export value, crude oil price volatility, current account balance, and industrial performance on the real GDP growth, in addition to crude oil price growth. In contrast to the mixed results reported in the literature, this study identifies a positive correlation between the growth rate of crude oil price and Mexico’s GDP. The paper concludes with a discussion on the ongoing petroleum regime reform that may shape the future of Mexico.

THE NEW BUDGET RULE FOR 2018-2020

The article considers a new mechanism for the formation of the Russian budget. This work is a continuation of the study of the draft budget for 2015 and the planning period 2016 and 2017. The new budget rule is aimed mainly at stabilizing the economy. The purpose of the rule is to reduce the dependence of the budget on market incomes. The new budget rule will be applied from 2018 onwards. The main directions of the new budget plan are defined, among which the development of the defense, space and nuclear industries is traditionally. The possible consequences of an increase in tax rates are considered. In this regard, the emphasis is on the main changes in the draft budget. The decision to change the budget rule is due to the fact that the current mechanism has a positive feedback, that is, it can contribute both to excessive strengthening of the ruble, and to its excessive weakening. The conclusions of the impact of the new budget rule on macroeconomic indicators and the ruble exchange rate have been made. Progressiveness of taxation in the oil sector will remain, but with the growth of oil prices, the ruble rate will no longer react so much. This means that the economy of oil projects will move along with oil prices. At the same time, the course’s stability will stabilize the situation for the non-oil part of the economy.

E&P Notes (November 2017)

E&P Notes Permian Winning Streak Could Be Running Out Stephen Rassenfoss, JPT Emerging Technology Senior Editor Hot shale plays tend to fall short of expectations after a few years, and the Permian Basin will be the next big test of the pattern. A recent technical paper by Robert Clarke, research director for Lower 48 Upstream for Wood Mackenzie, questions whether future drilling in the Permian will hit 5 million B/D in 2025 as the consultancy has predicted. Based on what he has been learning recently, some of it reported in SPE technical papers, the actual results could be worse or better, depending on how well the industry solves the problems that will come with intensive development in the Permian. Startup Aims To Advance Rocket Fuel Technology for Fracturing Stephen Whitfield, Senior Staff Writer A startup company in Canada is developing a tool that may help operators realize savings in resources and manpower in their fracturing operations. The PSI-CLONE tool from RocketFrac Services uses a proprietary solid rocket fuel mixture as a propellant fracturing mechanism which eliminates the need for significant water volumes. When loaded into the tool, deployed down a well, and ignited, the propellant releases high-pressure gas and creates enough pressure to produce fractures at targeted sites along the wellbore. The PSI-CLONE tool, which holds the propellant, is reusable. Once the propellant has burned out completely, the tool can be reloaded with another block of fuel. The company states that the system requires a single coiled tubing unit, as opposed to the multiple pumper trucks and water tanks used for hydraulic fracturing, and requires three to five onsite personnel Total Signs Deal With Chevron for Gulf of Mexico Acreage Supermajor Total increased its footprint in the US Gulf of Mexico, capturing seven prospects operated by Chevron. The agreement covers 16 blocks. Total, which recently increased its stake in the US Gulf of Mexico with its takeover of Maersk Oil, will participate in the seven wells through sharing between 25–40% interest. The prospects cover two promising plays: the Wilcox in the central Gulf of Mexico, next to the Anchor discovery; and the Norphlet, in the eastern Gulf of Mexico, near the Appomattox discovery. The first well already spudded in late July on the Ballymore prospect in the Mississippi Canyon. Energy Panel: Efficiency Focus Still Necessary in an Era of Transition Stephen Whitfield, Senior Staff Writer The oil price downturn has changed the way the oil and gas industry does business, and a panel of analysts and industry executives said that reinvention and creativity will be essential to surviving in a new reality. Held at the Global Energy Transitions Summit on the Rice University campus, the panel discussion featured an extensive look at how companies have managed to stay afloat in the current economic landscape. In September, oil prices reached their highest levels since April, but while industry hopes to see that figure sustain above $50/bbl and possibly reach $60, the panelists cautioned against getting overly enthusiastic. Greg Hill, president and COO of Hess, said “lower for longer” was still the primary factor behind his company’s operational strategy, and that it is not advantageous to build a business plan based on the possibility of future oil price growth.