Impact Of Oil Price Fluctuations Research Articles

Fluctuations oil prices in the world and their impact on Indonesian macroeconomics

Abstract Changes in international crude oil prices can significantly impact economic outcomes. This study tested the impact of oil price fluctuations on macroeconomic variables in Indonesia. The data used is annual data from 1990 to 2021 with the specific purpose of solving the current research deficiency about swings in oil prices. study adds five macroeconomic variables as explanatory factors to accomplish this purpose. We use five macroeconomic variables: economic growth, inflation, interest rates, industrial production, and exchange rates. The impact of oil price fluctuations on GDP, inflation, exchange rates, interest rates, and industrial production indices in Indonesia is examined within a structural vector autoregressive (SVAR) framework. Research shows that oil price shocks significantly impact GDP, inflation, and exchange rate. The results also show that oil price shocks hurt two other variables: the interest rate variable and the industrial production index. The findings derived from the analysis of the impulse response function indicate a detrimental effect on the growth of production, while exerting a favourable influence on inflation. However, the impact on industrial production, interest rates, and exchange rates is very modest and characterised by a degree of uncertainty.

Macroeconomic Impacts of Oil Price Fluctuations: Panel Data Evidence from Oil-Importing Developing Countries

This study reconnoiters the impact of oil price fluctuations on the macroeconomic performance of 95 oil-importing countries for the period 1981-2023. Due to an unobserved heterogeneity among the countries, the fixed effect approach of panel data estimation is employed. This approach is advantageous because it controls for the country-specific time invariant characteristics. According to our empirical findings, oil price fluctuations substantially affect GDP and Inflation. However, the coefficient on unemployment remains statistically insignificant. Our findings suggest that governmental policies should focus on reducing oil dependency by promoting renewable energy sources for improved macroeconomic performance and sustainable development.

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.

Pengaruh Ekonomi Makro, Harga Minyak Dunia, dan Rasio Keuangan terhadap Harga Saham pada Perusahaan Konstruksi di Indonesia

This research investigates the influence of macroeconomic and internal company factors on the share prices of construction companies in Indonesia. Through analysis of 111 observations of public companies from 2012 to 2021, this research finds that GDP growth has a significant positive influence on stock prices, with every 1% increase in GDP increasing stock prices by 10.76%. This shows that improving economic conditions increases construction companies' performance expectations. Inflation positively affects stock prices, with every 1% increase increasing stock prices by 9.87%. On the other hand, increases in interest rates and exchange rates have a negative impact, with every 1% increase reducing stock prices by 0.76% and 3.67%, respectively. The study also revealed that rising oil prices reduce stock prices by 0.77% for every 1% increase, indicating the negative impact of oil price fluctuations. Internal company factors such as ROE and DER are also influenced, where every 1% increase in ROE increases share prices by 2.08%, while a 1% increase in DER reduces share prices by 0.33%. These findings provide important insights into how macroeconomic and internal company financial factors influence share prices in the Indonesian construction sector, guiding investors and companies in making strategic decisions, especially in the construction sector.

Revisiting the relationship between Oil Price and Food Prices in the US: Evidence from Threshold Cointegration with Asymmetric Adjustment

The main objective of this paper is to investigate the interaction between oil and food prices using threshold cointegration analysis. The study uses monthly data from January 1997 to September 2020. Empirical results reveal evidence of asymmetry in the adjustment process toward equilibrium. Uni-directional causality is detected between the variables, with oil prices causing changes in food prices. Additionally, oil prices are found to be cointegrated with food prices, suggesting the presence of an asymmetric adjustment mechanism. Specifically, the speed of adjustment to equilibrium varies depending on the sign of the last equilibrium error. The study recommends that policymakers should consider adopting measures that promote energy diversification, sustainable agricultural practices, and price stabilization mechanisms to mitigate the impact of oil price fluctuations on food prices and to enhance overall economic stability.

The effect of oil price and macroeconomic factors on inflation rate in Azerbaijan: The application of time-varying coefficient VAR model and Granger causality analysis

This study analyzes inflation dynamics in Azerbaijan, focusing on the impact of oil price fluctuations and macroeconomic variables using advanced econometric methods, specifically a time-varying coefficient vector autoregressive model and time-varying Granger causality analysis. The research identifies significant inflation inertia, where past inflation rates shape future expectations. The relationship between oil prices and inflation has evolved, with contractionary policies mitigating the inflationary effects of rising oil prices after 2011, but oil price volatility and external inflationary pressures resurfacing post-2021. Azerbaijan’s exchange rate policy reduced inflation by lowering import prices before 2017, but its effectiveness has since weakened. Fiscal policy, particularly changes in M2, has played a key role in inflation dynamics, with contractionary measures after 2015 reducing inflation, while expansionary policies in 2022 reignited inflation. The study also shows that growth in the non-oil sector helps alleviate inflation, though its influence has diminished over time. The study concludes that effective policy measures are essential to manage inflation inertia, reduce dependence on oil revenues, and strengthen economic resilience in a rapidly changing global landscape.

Assessing the Impact of Oil Price Volatility on Food Prices in Saudi Arabia: Insights From Nonlinear Autoregressive Distributed Lags (NARDL) Analysis

Abstract This research investigates the impact of oil price fluctuations on food prices in Saudi Arabia between 1979 and 2020 using Nonlinear Autoregressive Distributed Lags (NARDL) methodology. The study employs Augmented Dickey Fuller (ADF) and Phillips Perron (PP) tests to determine the integration order of the variables and Bounds testing to confirm the existence of long run cointegration relationships between each variable. The results indicate that oil shocks influence food prices through several mechanisms. Firstly, the cost of energy increases due to the rise in oil prices, affecting the agricultural commodity market, including farm equipment, food processing, packaging, and distribution costs. Secondly, the demand for agricultural commodities to produce biofuels affects food availability and thus food prices. Thirdly, as an oil-based economy, the oil price shock affects food prices through its impact on government spending, which affects aggregate demand and liquidity. Therefore, Saudi Arabia should adopt appropriate policies to mitigate the impact of oil price shocks on food prices, including investing in renewable energy sources, diversifying its economy, and improving food production and supply chain efficiency. Additionally, implementing appropriate fiscal policies to ensure sufficient budget allocation for food support programs is crucial. However, Investing in groundwater exploration can contribute significantly to the development of Saudi agriculture and to gradually achieving food self-sufficiency.

Oil Price Volatility and Business Profitability: Evidence from The Local Market

This study seeks to investigate the impact of oil price volatility on business profitability in the Province of Guimaras. Through a mixed-methods approach, the study aims to answer important research questions such as the correlation between crude oil price changes and micro business profitability and investment, potential differences in the effect of crude oil prices during periods of high and low prices, trends in the profitability of micro businesses entrepreneurs, the role of the oil and gas upstream segment and its prospects for the future, and proposes an extension program toolkit to help micro business entrepreneurs mitigate the impact of oil price fluctuations on their businesses. The study will collect and analyze data from 200 micro business entrepreneurs operating in five municipalities within the Province of Guimaras, which represent approximately 90 percent of micro businesses in the area by population. By providing significant insights into the impact of oil price volatility on small businesses, the findings of this study can help inform policymakers and business owners to improve economic sustainability and competitiveness in the local market. The researchers recommend several strategies to help small businesses better manage the risks associated with oil price volatility. These include diversifying business operations and revenue streams, developing proactive risk management strategies, seeking financial support and education, and advocating for policies that promote energy efficiency or diversify energy sources. The researchers hope that these recommendations will help small businesses maintain profitability in the face of changing market conditions.

Oil price fluctuations and economic growth–banking sector nexus: modeling for MENA countries

PurposeThe aim of this paper is to evaluate empirically the impact of oil price fluctuations on the relationship between banking sector development and economic growth in oil-importing MENA countries.Design/methodology/approachThe study used the newly developed panel autoregressive distributed lagged (ARDL) approach in order to address any potential endogeneity between research variables.FindingsThe empirical results show a unidirectional causality in the long run from oil price to both economic growth and banking sector development for oil-importing countries. Also, banking sector development not only leads directly to economic growth but also can play a moderator role in the oil price—economic growth nexus.Research limitations/implicationsThe study has two principal limitations. On the one hand, this study was conducted in a relatively limited sample of countries. On the other hand, the study did not consider others indicators for banking sector development and others macroeconomic variables.Practical implicationsThe results found have imperative implications for banks' managers, regulators and researchers. Bank managers should be more concerned with the negative repercussions of oil price fluctuations on the development of their banks. The regulatory authorities must emphasize policies and strategies to further strengthen their banking sector in order to alleviate the negative influence of oil price shocks on economic growth. Researchers focused on finance-growth nexus must take into account the potential influence of oil price shocks.Originality/valueThe developed conceptual model allows examining to what extent the oil price fluctuations might affect the relationship between economic growth and banking sector development. This effect is neither evaluated nor clarified in the relevant literature.

Effect of oil price shocks on output and prices: evidence from Saudi Arabia.

The primary objective of this article is to estimate how the spike in oil prices has impacted Saudi Arabia's output and other macroeconomic indicators. To address this question, the study utilizes a simple VAR estimation and VAR estimation with sign restrictions, specifically an oil demand shock and an oil supply shock, to determine the influence of oil price shocks. The study's findings are consistent with conventional wisdom and current research from oil-exporting countries. Consistent with all model specifications for both periods (monthly 2010q1 to 2020q2 and quarterly 1996q1 to 2020q2), the study finds that an oil price shock benefits the Saudi Arabian economy. The results indicate that a 10% increase in oil prices leads to a 2% increase in output, a 0.15 percentage point increase in the consumer price index, a 6% increase in export value, and a 3% increase in import value. The study highlights the importance of considering both oil supply and demand shocks in analyzing the impact of oil price fluctuations and concludes that the demand shock is more influential than the supply shock.

The Terms of Trade Effect on Agriculture Export the Case of Indonesia as a Net Oil Importer Country

This study investigates the effects of changes in terms of trade (t.o.t) on economic indicators in net oil-importing countries. Findings demonstrate that improving trade conditions lead to increased profitability, investment opportunities, and capital accumulation, although the pace of accumulation slows down after an initial period of rapid growth. The study also highlights the positive impact of trade terms on foreign debt in developing economies, as enhanced terms of trade contribute to higher export revenues and better capacity to service debt obligations. The study suggests two measures: strengthening domestic energy production and implementing hedging strategies to mitigate the impact of oil price fluctuations on foreign debt. Furthermore, the analysis explores the influence of terms of trade on employment, interest rates, capital costs, net oil imports, final output, and agricultural product exports. These indicators are affected by changes in terms of trade, driven by factors such as increased productivity, shifts in comparative advantage, and market dynamics. Overall, this study emphasizes the significance of terms of trade in shaping economic dynamics and provides insights into policy measures to enhance energy security, reduce oil import dependency, and promote economic resilience in net oil-importing countries.

Jet Fuel Price Risk and Proxy Hedging in Spot Markets: A Two-Tier Model Analysis

This paper applies a two-tier model based on fuel hedging (model 1) and the testing of the impact of commodity risk on airline capacity forecasting, which is based on a system dynamics framework (model 2). Model 1 provides a comprehensive examination of the worldwide airline industry, including an analysis of the statistical impact of oil price fluctuations on the sector and the corresponding hedging strategies employed by airlines. This study examines a sample of North American and European airlines over a 10-year timeframe to assess the degree to which these airlines have engaged in kerosene hedging for future periods and the potential impact of such hedging on their corporate value and performance. In model 2, the author integrates a capacity-forecasting model within the system dynamics framework, drawing upon the theory of capacity forecasting. The study examines the impact of commodity risk by analysing the influence of fluctuations in the jet fuel spot price on the average airfare and its subsequent effects on other interdependent capacity variables. The hypotheses presented in this study were formulated based on a comprehensive review of the relevant literature and a causal feedback loop diagram. The diagram effectively depicts the dynamic interrelationships between capacity forecasting and risk variables. Furthermore, the diagram capturing causal feedback loops was transformed into a stock-flow diagram. This diagram was then utilised to evaluate the hypotheses that were derived using a dataset that pertains to the domestic airline market in the United States. The verification of the qualitative and quantitative models demonstrates the proven impact of commodity risk on capacity forecasting.

Causality among Oil Revenue, Non-Oil Revenue, Fiscal Risk Factors and Budget Execution Phase in Relation to Debt Overhang and Crowding-Out Theories: Contending Gap Issues

We reviewed literatures on the complex causality among oil revenue, non-oil revenue, fiscal risk factors and budget execution phase in relation to debt overhang and crowding-out theory. The majority of papers surveyed study on investigated the long-run and short-run relationship between fluctuations of oil price ; direction of causality between total revenue and total government spending ; the dynamics of the tax revenue and expenditure nexus, explored the impact of oil prices volatility on the key factors of the government budget, analyse the relationship between public expenditure and debt —little research in the area of the impact of oil price fluctuations on key macroeconomics variables. The evidence provided by the empirical literature is that there are indeed heterogeneous responses to position on complex causality among oil revenue, non-oil revenue, fiscal risk factors and budget execution phase in relation to debt overhang and crowding-out theory. It is detected that most study reviewed did not disintegrated relevant revenue: oil revenue (upstream oil revenues, downstream oil revenues, petroleum profit tax(PPT)); non-oil revenue (company income tax (CIT), value added tax (VAT), personal income tax ) and budget risk factors: oil price volatility (OPV)(OPEC Spot OPV, Brent OPV, West Texas Intermediate OPV), public debt (external public debt, domestic public debt), debt servicing (external debt interest service and domestic debt interest service) on budget execution phase (public expenditure: capital budget expenditure and recurrent budget expenditure). It is recommended that research effort should be made in answering the following research questions: what is the effect of oil revenue on budget implementation (public expenditure: capital expenditure and recurrent expenditure)? How non-oil tax revenue is correlates with budget implementation (public expenditure: capital expenditure and recurrent expenditure)? Of what effect is oil price vola

The effect of oil price shocks on stock market performance in selected African countries

AbstractThe study's objective was to investigate how changes in oil prices affect stock market performance. The study's population consisted of selected African countries chosen based on factors like the size of their stock markets and whether or not they import or export oil. The world development indicator (WDI) and the OPEC bulletin or website served as sources for the data. The vector error correction model was used to analyse the collected data. Regarding the impact of oil price fluctuations on the performance of the stock market, the findings of the study were mixed. Oil price fluctuations have a positive impact on stock market performance for countries that import oil. For oil‐trading countries, the impacts were found to differ across examined countries. Oil price fluctuations had a mixed effect on both large and small stock markets. This demonstrates how crucial it is to investigate changes in the price of oil and how they might impact stock market performance, particularly in African countries.

<p>The Impact of Fluctuation of the International Oil Prices on the Public Budget of Iraq (An Analytical Study During the Period from (2001 - 2019)</p>

This research aimed to Determining the extents to which oil domination over public finance in Iraq has reached and determining the proposed future scenarios ,Iraqi economy loses an amount more than a billion dollars due to lower crude oil prices, the amount of one dollar in the price of a barrel of oil produced by the compounding of the budget deficit, to be investment spending is the victim of any drop in oil prices, which means stop wheel ages and growth in Economy, It was also suggested that Mali establish a sovereign fund that is tied to the country's fiscal policy and serves as collateral for future generations, with the savings portion of oil revenues and other miscellaneous income channeled through the fiscal deficit to compensate for and act as an emergency fund. That is why the fluctuation of oil prices and its impact on the general budget was chosen, and data were collected from the Central Bank, the Iraqi Ministry of Finance and OPEC, and the study is based on a review of the various literature presented in the paper. For the purpose of the current study, the oil sector was chosen. The variables of exchange rate, gross domestic product, price per barrel, oil revenues, oil revenues, and inflation were measured with the help of data on a scale by using the multiple regression model. Indeed, the volatility of oil prices has been measured. The study concluded that there is an impact of oil price fluctuation on the general budget . The Iraqi economy loses more than one billion dollars due to the drop in crude oil prices by one dollar in the price of a barrel of oil it exports, which exacerbates its budget deficit. This paper contributes to the search for an alternative standard model that is able to effectively explain the impact of oil price fluctuations on the public budget in Iraq.This paper will be valuable for decision makers in Iraq to know the impact of oil price fluctuations on the public budget and reduce the budget's dependence on oil revenues.

유가 변동은 경제성장에 대해 비대칭적 효과를 갖는가?

In this paper, We empirically analysis the impact of oil prices on the economic growth of Korea, China, and Japan in Northeast Asia. The analysis period used variables such as per capita GDP, international oil prices, real effective exchange rates, consumer price index, and total currency in the three countries from the first quarter of 2000 to the fourth quarter of 2022. The NARDL model proposed by Shin et al. (2014) was applied to analyze the effects of rising and falling oil prices. In this study, first, it was found that fluctuations in oil prices in all three countries affect economic growth. However, it was not statistically significant in the long run. Second, the impact of oil prices on economic growth in all three countries was found to be asymmetric. In the short term, the rise and fall of oil prices showed statistical significance in Korea, China and Japan. Third, the impact of oil prices in Korea and Japan is similar to the analysis results of previous studies analyzed in advanced countries (e.g., OECD countries). However, in the short term, the impact of oil price fluctuations on China has differentiated results from Japan and Korea. Each of the three countries’ error correction terms coefficients is statistically significant, which means that short-term economic growth is adjusted to a long-term equilibrium relationship at a certain rate for one year if any impact occurs in the system.

Using Generalized Linear Model to Determine the Impact of Oil Price Fluctuations on the Egyptian Public Budget

Oil is regarded as one of the most significant energy sources in the world due to the enormous impacts it has on the level of the economy as a whole in both developing and developed countries and for both producing and importing countries. so, this study aims to know the effects of fluctuations in oil prices on the Egyptian public budget during the period from 2000 to 2022. For this purpose, the study used the GLM(Generalized linear Model) model, which is one of the first studies to use this model in economics. The study concluded that oil price fluctuations negatively affect the public budget, which means that there is a positive relationship between oil price fluctuations and the general budget deficit in Egypt as a result of Egypt being one of its importing countries. Therefore, the rise in oil prices leads to an increase in the public budget deficit, and its low prices may contribute to a decrease in this deficit.

The Impact of Changes in Crude Oil price on the Yield and Volatility of Manufacturing: Evidence from the US and China

This study is based on the data of WTI international futures crude oil price, China manufacturing Index and the United States Dow Jones Manufacturing Index from November 23, 2021 to June 16, 2022. This paper uses VAR and ARMA-GARCH models to analyze the changes in yield and volatility of manufacturing in the US and China. The results show that the change of crude oil price under the situation of Russia-Ukraine conflict has a negative effect on the return rate of manufacturing industry in China and the United States, but the impact on the return rate of manufacturing industry in China is greater than that of Dow Jones, and the impact on the return rate of manufacturing industry in the United States will gradually disappear as time goes by. In order to reduce the adverse impact of oil price fluctuations on manufacturing industry, this study puts forward some suggestions, such as adopting diversified ways of oil import and export trade and actively developing and utilizing other energy sources.

The Impact of Oil Price Fluctuations on the Motor Vehicle Market under the Russia-Ukraine conflict

On February 24, 2022, Russian President Vladimir Putin dispatched Russian troops to invade the territory of Ukraine on the grounds of "demilitarization and de-Nazification." The conflict officially turned into a full-scale war from that day and quickly developed in Europe since World War II. the most significant war ever. After the Russian-Ukrainian war broke out, related industries also suffered from price fluctuations, especially crude oil. The crazy rise in crude oil prices has also changed people's car-using habits, which has considerably impacted electric vehicles and gasoline vehicles. NIO was selected as the representative of electric vehicles, and Honda is the representative of fuel vehicles. This paper intercepts their stock data from the months before and after the Russia-Ukraine conflict and uses the VAR model and ARMA-GARCH model to analyze the impact of WTI crude oil price rises caused by the Russian-Ukrainian conflict on new energy vehicles and fuel vehicles.

Impact of Oil Price Fluctuations and Economic Growth: Insights from Nigeria

Impact of Oil Price Fluctuations and Economic Growth: Insights from Nigeria