International Energy Market Research Articles

The Economic Shockwaves of the Russia-Ukraine Conflict and Energy Sources Prices – The Impact on International Energy Markets

The Russia-Ukraine conflict has raised concerns regarding the stability of the global energy sector, considering that Russia is a big player in the industry, producing and exporting crude oil and natural gas globally. This study aimed to empirically investigate the impact of the conflict on the prices of energy sources in international markets. The analysis was conducted using secondary data. The data was for prices of various commodity products, including diesel, petroleum, natural gas, and crude oil. The data was collected on multiple international markets for periods from January 1, 2021 to November 30, 2023. The analysis was conducted using trend analysis and event study. The capital asset pricing model (CAPM) was adopted to run the event study analysis. The results indicated that immediately after the Russian invasion of Ukraine, major energy products such as US crude oil, European crude oil, and the global energy index experienced a sharp rise in price, followed by significant price volatility over the following up to seven months. The review of OPEC energy prices also indicated an increase in prices, and volatility was experienced in countries producing and exporting oil products. The event study further revealed that there was a sharp increasing trend immediately after the event date and an upward trend for more than ten months after the event, resulting in the highest prices recorded in the event window. The study suggested three policy implications - conflict should serve as a wake-up call on diversification of energy sources, investment in alternative, sustainable and green sources of energy to reduce the dependence on oil, and promotion of international cooperation on energy security.

Asymmetric dynamic linkage between consumer sentiment, inflation expectations, and international energy prices: Evidence from time-frequency wavelet and nonlinear analysis.

This study investigates the relationship between consumer sentiment (CONS), inflation expectations (INEX) and international energy prices, drawing on principles from behavioral. We focus on Brent crude oil price and Henry Hub natural gas prices as key indicators of energy market dynamics. Based on the monthly data from January 2003 to March 2023, three wavelet methods are applied to examine the time-frequency linkage, while the nonlinear distributed lag model (NARDL) is used to verify the asymmetric impact of two factors on energy prices. The results highlight a substantial connection between consumer sentiment, inflation expectations and international energy prices, with the former in the short term and the latter in the medium to long term. Especially, these correlations are particularly pronounced during the financial crisis and global health emergencies, such as the COVID-19 epidemic. Furthermore, we detect short-term asymmetric effects of consumer sentiment and inflation expectations on Brent crude oil price, with the negative shocks dominating. The positive effects of these factors on oil prices contribute to observed long-term asymmetry. In contrast, inflation expectations have short-term and long-run asymmetric effects on natural gas price, and both are dominated by reverse shocks, while the impact of consumer sentiment on natural gas prices appears to be less asymmetric. This study could enrich current theories on the interaction between the international energy market and serve as a supplement to current literature.

Environmentally clean and dirty energy equities during extraordinary global conditions

I examine which extraordinary international events coincide with pronounced changes in the equity markets for some of the world’s largest publicly traded suppliers on opposite sides of the global energy mix — oil and environmentally clean energy companies. First, I adapt an intuitively appealing non-parametric filter to empirically timestamp unexpected and prominent increases and decreases in a wide range of global indicators relevant to the international energy market. Then, I use such extraordinary conditions to characterise the performance of oil and environmentally clean energy equities, and their relationships. My findings suggest that jumps in the global stock market, international crude oil market shocks, and the US dollar real effective exchange rate, are the indicators that define the financial landscape during which considerable gains, losses, and instability across both types of energy markets materialise. In contrast, major elevated uncertainties related to geo-political risk and climate policy reflect relative stability in the equities of both oil and environmentally clean energy companies. Although these results imply that both energy assets are potentially lucrative hedging strategies for investors to exploit during heightened geo-political and climate policy uncertainties, clean energy equities offer market participants the option to combine profit maximising and sustainability objectives while minimising global energy security risks.

National climate legislation and policymaking and energy security: International evidence

With the shift towards low-carbon economies, energy security has emerged as an increasingly vital concern for governments worldwide, particularly in recent years, because of ongoing conflicts and increased volatility in the international energy market. Both laws and policies are essential tools for mitigating climate change challenges; however, its role in energy security remains unexplored. Drawing on climate-related legislative activities in 127 countries from 2000 to 2021, this study examines the short- and long-term impact of climate laws and policies on energy security performance (ESP). The empirical results demonstrate that both recent and longstanding climate laws and policies have enhanced the national ESP on a global scale. Furthermore, we find that laws outperform policies regarding energy security improvement. Additional analyses indicate that the impact of climate laws and policies on ESP is more effective across high- and upper-middle-income countries, and less effective in low-income countries, especially those in Africa. Our findings highlight the significance of climate legislative efforts and provide important implications for global governments in securing their green transition.

Effects of adverse geopolitical risk on price bubbles contagion from European natural gas prices to international energy prices

PurposeThe recent Russia–Ukraine conflict highlights the geopolitical importance of natural gas, especially in Europe. In this light, this study examines the impact of the Russia–Ukraine conflict on the spread of price bubbles from European natural gas to international energy prices.Design/methodology/approachThe Generalized Supremum Augmented Dickey-Fuller (GSADF) test is employed to detect the occurrence of price bubble episodes while the Dynamic Logit Model is used to examine price bubble contagion between the two markets. Further, a tri-variate VAR model is used to examine the determinants of the price bubble.FindingsThe findings reveal multiple bubble episodes in both European natural gas and international energy prices. Further, evidence of bilateral contagion between European natural gas and the international energy market is found. In addition, the Russia–Ukraine conflict triggers price bubble episodes in both markets. Finally, a counterfactual analysis suggests that the conflict increases the bubble contagion from the European natural gas market to the international energy market by about 40%. These findings imply that the Russia–Ukraine conflict is a significant driver of high upside risks to bubble occurrence and subsequent contagion to both European natural gas and international energy prices.Originality/valueTo the best of our knowledge, this study contributes new empirical evidence that the Russian–Ukrainian conflict significantly impacts the spread of price bubbles from the European natural gas market to international energy markets.

Energy cooperation between Kazakhstan and China under “One Belt and One Road”: current state, challenges and perspectives

Object: The purpose of this study is to examine the opportunities and challenges of energy cooperation between Kazakhstan and China under “One Belt and One Road” (OBOR) using SWOT analysis and to propose optimization recommendations for upcoming energy cooperation projects between the two countries. Methods: The methodology used in this study includes comparative data analysis and statistical analysis for quantitative data. A mind map was created using SWOT analysis to visualize the opportunities and challenges of energy cooperation between China and Kazakhstan. Findings: The results of the study indicate that the complementarity of the energy structures of China and Kazakhstan is a motivation for energy cooperation. The risks of energy cooperation between China and Kazakhstan are mainly due to the instability of the international energy market. Energy cooperation under OBOR Initiative can help to promote the development of their economies. Conclusions: According to the research, energy cooperation is one of the most important components of the OBOR Initiative. Through energy cooperation, Kazakhstan and China can realize their plans for the development of renewable energy sources as much as possible based on ensuring energy security.

Multifractal Analysis of International Energy and Agricultural Markets Under the Influence of Russia–Ukraine Conflict

Taking six representative futures in the international energy and agricultural markets as the research objects, we use multifractal analysis methods to study the fluctuation characteristics, market risks and cross-correlations within and between these markets before and after the outbreak of the Russia–Ukraine conflict in this paper. The empirical results show that both the auto-correlations and cross-correlations have obvious multifractal features. It is confirmed that the multifractal strength and market risks of the international energy markets have weakened, while those of the international agricultural markets have enhanced after the Russia–Ukraine conflict broke out. In addition, the Russia–Ukraine conflict has intensified the strength of the multifractality and the degree of fluctuation complexity between these two classes of international markets. Further, the intrinsic multifractal natures of cross-correlations are tested, and the apparent and intrinsic multifractality before and after the conflict are revealed. Finally, some policy suggestions are put forward based on the empirical results.

Prediction of wind energy with the use of tensor‐train based higher order dynamic mode decomposition

AbstractAs the international energy market pays more and more attention to the development of clean energy, wind power is gradually attracting the attention of various countries. Wind power is a sustainable and environmentally friendly resource of energy. However, it is unstable. Therefore, it is important to develop algorithms for its prediction. In this paper, we apply a recently developed algorithm that effectively combines the tensor train decomposition with the higher order dynamic mode decomposition (TT‐HODMD). The dynamic mode decomposition (DMD) is a data‐driven technique that does not need a prior mathematical model. It is based on the measurement data or time slots. As demonstrated, for prediction it is important to use the higher order DMD (HODMD). In turn, HODMD might lead to very large scale arrays that are sparse. The tensor train decomposition provides a highly efficient way to work with such arrays. It is demonstrated that the combined TT‐HODMD algorithm is capable of providing quite accurate prediction of wind power for months ahead.

Macroeconomic impacts and co-benefits of deep-decarbonization in Thailand

The updated Nationally Determined Contributions (NDC) in 2022 of Thailand includes an aggressive GHG emission reduction target of 40% in 2030 from its baseline emissions. However, the macroeconomic impacts and co-benefits associated with reducing GHG emissions are not addressed. This study analyzes the macroeconomic implications and co-benefits of GHG emission reduction in Thailand to achieve the NDC and net zero emission (NZE) targets by 2050 using the AIM/Hub-Thailand model. This paper provides co-benefits for Thailand on ambitious long-term GHG emission reduction targets. Considering the co-benefit analysis in the policy documents will provide holistic insights on the positive impacts of GHG mitigation. Results show that Thailand would have to bear a GDP loss of 7.7% in 2050 compared to the BAU level if the net zero emissions need to be achieved. Fuel switching from fossil fuel to electricity in the demand side and improvement of technologies in the power sector also reduces air pollutant emissions. The increasing dependence on domestic energy supply in the NZE scenario will make the country less vulnerable to the fluctuating prices in the international energy market. In terms of trade-offs, the land use for sustainable biomass in both the NDC and NZE scenarios will be larger than in the BAU scenario. Results show better land use for biomass production and higher yields in agricultural production. Moreover, the achievement of NZE pathway will require effective usage of land area and better use of energy resources, thereby making the country more energy secure.

Are China’s Renewable Energy Products Competitive in the Context of RCEP?

In recent years, in order to address climate change and energy depletion, countries around the world have been constantly promoting energy transformation and structural upgrading. The effectiveness of RCEP has broadened the international east Asian new energy market. The development of renewable energy trade in the context of RCEP has attracted significant economic, environmental, and technical attention. Based on the background of RCEP in this study, the constant market share (CMS) model and the weighted dominant comparative advantage (IRCA) index are used to assess the export competitiveness of renewable energy products from 2006 to 2021. The data in this paper were obtained from the UN comtrade database according to the categorical statistics of HS codes. The results show that: (1) the overall competitiveness of Chinese renewable energy products shows an upward trend; (2) the comparative advantages of Chinese renewable energy products are strong, with some differences among different industries; (3) the growth effect is the main reason for the fluctuation of Chinese renewable energy product exports; and (4) the signing of RCEP has injected new vitality into Chinese renewable energy trade. Finally, based on the research conclusions, the paper puts forward corresponding policy proposal.

Global uncertainties, geopolitical risks and price exuberance: Evidence from international energy market

AbstractThe interaction of global uncertainty and geopolitical risks with energy price fluctuations has remained a critical global issue. This interaction can impact several regions' macroeconomic performance and welfare by making fundamental energy price forecasting more difficult, which may lead to exuberant behaviour. To help producers, consumers, and regulators make informed decisions in the face of volatile and uncertain energy markets, it is critical to highlight how these uncertainties influence price exuberance. In this light, this study examines the impact of global uncertainty and geopolitical risks on international energy price exuberance using monthly data from January 1990 to October 2022. The study employs supremum augmented Dickey–Fuller (SADF) and generalised augmented Dickey–Fuller (GSADF) tests to identify energy price exuberance. Firstly, consistent with exuberant behaviour, the tests identify seven episodes of explosive behaviour in the international energy prices within the sample. Secondly, this study applies the Logit model to estimate the impact of global uncertainty and geopolitical risks on price exuberance. The estimates suggest that the heightening of global uncertainty may deflate the price exuberance. This study also observes that adverse geopolitical risks (threats and acts) in the world and Ukraine amplify the likelihood of price exuberance in the market. However, adverse geopolitical risk (GPR) in Russia negatively impacted the formation of price exuberance. This finding implies that policymakers can use global uncertainty and geopolitical risks as early warning indicators of probable price exuberance in the international energy market. The findings also indicate the need for a buffer system and safe passage for the flow of energy supply in a geopolitical conflict or a major global event. The study further shows the need for a coordinated effort in innovation, research, and development to enhance energy efficiency and minimise reliance on fossil fuels, which these uncertainties may not significantly influence.

The repercussions of the Corona pandemic on the international energy market

يحتل سوق الطاقة الدولية أهمية كبيرة على المستوى الدولي بشكل عام وفي العلاقات الاقتصادية الدولية بشكل خاص ,لما تشكله مصادره المتمثلة بالطاقة التقليدية (النفط والغاز والفحم والطاقة النووية) وغير التقليدية (النفط الثقيل والنفط الصخري والغاز غير التقليدي...الخ) والطاقة المتجددة (الشمسية ,الرياح, المحيطات, الحرارة الارضية, الطتلة الحيوية), لذا نلاحظ بأن العديد من البلدان الصناعية قد زاد طلبها على هذه المصادر في ظل الازمات الدولية. هذا من جانب ومن جانب اَخر كان لتداعيات جائحة كورونا انعكاسات اقتصادية كبيرة طالت كافة بلدان العالم وفُرضت إجراءات صارمة كالأغلاق والتباعد الاجتماعي والحجر الصحي, وهذا ما كشف عن عدم فاعلية الأنظمة الصحية العالمية في مواجهة هذه الجائحة ,مما ترك اَثار وخيمة ترتب عليها خسائر كبيرة على المستوى الدولي وعلى صعيد كافة القطاعات الاقتصادية مثل تراجع النمو الاقتصادي العالمي والناتج المحلي الإجمالي وتدهور أغلب الموازنات الحكومية.

СОВОКУПНЫЙ РИСК ПРИ РЕАЛИЗАЦИИ КРУПНОГО КОМПЛЕКСНОГО ПРОЕКТА СТРОИТЕЛЬСТВА АТОМНОЙ ЭЛЕКТРОСТАНЦИИ

The article identifies the problems of the modern international nuclear energy market, analyzes domestic and foreign experience in the construction of technically complex megaprojects, studies and systematizes organizational and technical aspects of the concept of reliability and risks of technically complex industrial facilities on the example of an international project for the construction of a nuclear power plant. The purpose of the research article is to solve one of the most important tasks – to determine the total investment risk and its assessment in an inextricable relationship with the stages of the project life cycle. The article systematizes both the principles of assessing the organizational and technical reliability of the system under study, as well as the methods of types of aggregate investment risk. A proprietary multi-criteria approach to the concept of reliability is being developed using modern theoretical methods in the context of the development of nuclear power plant construction projects abroad, respectively, taking into account country and industry risks.

Unraveling the challenges of waste-to-energy transition in emerging economies: Implications for sustainability

The recent geopolitical events, such as the conflict between Russia and Ukraine, have strained the available resources worldwide. In emerging economies like Bangladesh, which is heavily reliant on imported gas, oil, and coal, this has created a severe energy crisis. In response to the energy crisis and to support eco-friendly waste management, converting waste into energy is being recognized as a promising solution. However, introducing waste-to-energy systems in developing economies faces many intricate challenges that require careful examination. This study, therefore, aims to explore and evaluate the challenges associated with adopting a waste to energy (WtE) conversion system in emerging economies like Bangladesh. The research methodology involves identifying challenges from an extensive review of existing literature and expert feedback and then combining Bayesian theory with Best Worst Method (BWM) to evaluate the challenges. Among the 21 challenges analyzed, the ‘need for well-developed planning and incentivized policymaking’, ‘ineffectiveness in waste segregation at the source’, and ‘high cost for installation, maintenance, and infrastructure development’ appear to be the most significant challenges with weight values 0.071, 0.067, and 0.066, respectively. The study can enhance managers' understanding of the challenges faced by this sector and thus facilitate informed decision-making. The outcomes of this study are expected to enrich the existing body of knowledge, promote the diffusion of WtE technology in emerging economies, reduce dependency on the international energy market, and achieve global sustainable development goals (SDGs) such as affordable and clean energy (SDG 7), sustainable cities and communities (SDG 11), and climate action (SDG 13).

The Economic Impact of Geopolitical Conflict: Energy, Markets, and Policy Recommendations

The Russia-Ukraine war leads to profound economic impact on energy markets, international industrial chains, and government inflation controls. Shortages of energy supply and rising energy prices are creating problems for both energy consumers and energy suppliers. Changes in the energy supply structure and the international energy system have brought new patterns to the international energy market. The war disrupted the international industrial chain, causing shortages of critical raw materials and parts, affecting the production and operations of many enterprises. The whole globe was forced to take steps to mitigate the effects of war on inflation. This research aims to find the economic impact of this significant geopolitical conflict, with respects to energy, market and policy recommendations. The research believes that it will be quite significant for governments and firms to peacefully stop the conflicts, or it will continuously disturb the global economy and make a few countries in great trouble. For international communities, they can make efforts to promote peaceful solutions to the conflict.

Exploring the impacts of major events on the systemic risk of the international energy market

This study examines the systemic risk caused by major events in the international energy market (IEM) and proposes a management strategy to mitigate it. Using the tail-event driven network (TENET) method, this study constructed a tail-risk spillover network (TRSN) of IEM and simulated the dynamic spillover tail-risk process through the cascading failure mechanism. The study found that renewable energy markets contributed more to systemic risk during the Paris Agreement and the COVID-19 pandemic, while fossil energy markets played a larger role during the Russia-Ukraine conflict. This study identifies systemically important markets (SM) and critical tail-risk spillover paths as potential sources of systemic risk. The research confirms that cutting off the IEM risk spillover path can greatly reduce systemic risk and the influence of SM. This study offers insights into the management of systemic risk in IEM and provides policy recommendations to reduce the impact of shock events.

Hydrogen storage in depleted offshore gas fields in Brazil: Potential and implications for energy security

This article estimates the potential of using depleted offshore gas fields in Brazil for hydrogen storage and the effects this may have in terms of energy security. Brazil is starting to invest in producing green hydrogen associated with offshore wind energy generation. This initiative has stimulated the search for suitable locations to store hydrogen, including in depleted offshore gas reservoirs. The methodology used in this paper allows for identifying which of the 85 assessed depleted offshore gas fields are the most suitable for hydrogen storage and evaluating the storage capacity of the selected fields. In addition, a wind speed analysis is made to investigate possible locations for prospective wind energy generation projects that can accommodate green hydrogen production. As our main result, we find that the selected depleted offshore gas fields have the potential to store around 5483 TWh worth of hydrogen. This amount is equivalent to about 10 times the total annual electricity consumption in Brazil. Hence, Brazil can comfortably leverage its offshore wind potential in connection with hydrogen production to enhance the energy security of its electricity supply. Considering that to date primarily natural gas has been used as the main source of energy security in Brazil and that its share in the electricity sector has significantly increased over the last decade, the combination of hydrogen storage and renewable energy such as offshore wind power has the potential to provide a resilient and decarbonised electricity system in the country. Furthermore, hydrogen stored in offshore reservoirs in Brazil can become an important resource in the international energy market and constitute a possible key to energy security for countries to which Brazil may export hydrogen. We end our paper by providing comments on the challenges, opportunities, and prospects of offshore hydrogen storage in Brazil.

International and Chinese energy markets: Dynamic spillover effects

On the basis of a time-varying parametric vector autoregressive model (TVP-VAR) with spillover index model and wavelet coherence analysis, we study spillover effects of price fluctuations in global and Chinese energy markets. The empirical results indicate that the price trends of coal, crude oil, and natural gas in China and the world are closely interlinked. Extreme events have significantly amplified energy market fluctuations' spillover effect. Additionally, international energy market is a net exporter of fluctuations and spillovers, especially crude oil, and natural gas, which is consistent with China's energy import structure. There are time-varying characteristics and cross-effects between spillover effects in different energy markets. Finally, rising shipping costs, increased stock market volatility, and geopolitical risks are more likely to exacerbate cross-market risk spillovers, while exchange rate depreciation and economic policy uncertainty can dampen risk spillovers to some extent. Based on our findings, we recommend the following actions: build a comprehensive energy price warning mechanism, establish and improve the natural gas futures market, set up a more diversified investment portfolio and dynamically adjust investment strategies, and more flexible and precise policy combinations.

Features and Evolution of Global Energy Trade Patterns from the Perspective of Complex Networks

As an integral part of economic trade, energy trade is crucial to international dynamics and national interests. In this study, an international energy trade network is constructed by abstracting countries as nodes and representing energy trade relations as edges. A variety of indicators are designed in terms of networks, nodes, bilaterals, and communities to analyze the temporal and spatial evolution of the global energy trade network from 2001 to 2020. The results indicate that network density and strength have been steadily increasing since the beginning of the 21st century. It is observed that the position of the United States as the core of the international energy market is being impacted by emerging developing countries, thus affecting the existing trade balance based on topological analysis. The weighted analysis of bilateral relations demonstrates that emerging countries such as China, Brazil, and Saudi Arabia are pursuing closer cooperation. The community analysis reveals that an increasing number of countries possess strong energy trade capabilities, resulting in a corresponding increase in energy trade volumes.

Strategic Priorities for Green Diversification of Oil and Gas Companies

The inconsistency of arguments regarding the value of diversification strategies means that there is a lack of a unified methodological approach and a method for evaluating the impact on efficiency and competitive ability of companies. Research shows that diversification was crucially important for oil and gas companies during the economic shocks of 1998, 2009, and 2015. Nowadays, oil and gas companies apply the strategy of green diversification to solve climate change problems and adapt to energy transition trends. The goals of 14 global oil and gas companies with regard to carbon neutrality were analyzed in this study. This research expands the theoretical studies of diversification processes and outcomes in the oil and gas industry and contributes to the discussion of the feasibility of companies implementing renewable energy projects. The factors that prompt oil and gas companies to adopt green diversification were formulated, and their key strategic priorities were determined depending on the volume of proven resources. The research suggests that global shocks in the international energy market and a reduction in the significance of oil and gas resources in the overall power balance stimulate companies to diversify their asset portfolios, but such strategy does not protect against negative impacts. In addition, important issues were identified for further analysis.