Oil-exporting Countries Research Articles

Global Oil Price and Innovation for Sustainability: The Impact of R&D Spending, Oil Price and Oil Price Volatility on GHG Emissions

Recently, sustainable economic growth has taken the front line of the global development agenda. The common dependency on fossil fuel energy, greenhouse gas (GHG) emissions and the continuous rising demands for energy have posed challenges that put the world in a climate change trap. This work empirically analyzes the effect of innovation, oil price, oil price volatility and economic growth on GHG emissions over the period of 1991–2015. The study compares the emission level between European Union countries (EU) (26), oil-producing countries (22), China and the United States of America (USA) using the Driscoll–Kraay model. The main empirical finding points to a positive effect of innovation on GHG emission reduction initiatives in oil-importing economies. Particularly, EU countries significantly minimized emissions due to innovation, followed by China and the USA. Contrarily, the effect of innovation increases GHG emission in oil-exporting economies. The results also indicate broader significant effects of oil price and oil price volatility on GHG emission. Interestingly, the effect of oil price on GHG emission is asymmetrical between oil-exporting and -importing economies. Oil price increases in oil-importing countries decrease GHG emission; contrarily, its effect increases emissions in oil-exporting countries. Thus, oil-exporting countries lack motivation to decrease emission levels due to oil price escalation. Unlike the oil price, oil price volatility comparably decreases GHG emissions in oil-exporting and -importing economies. Thus, one might be tempted to take oil price volatility and the future uncertainty of oil price as a virtuous instance rather than oil price increment. Thus, policymakers need to pay attention to market forces and policy measures to monitor GHG emissions due to economic activities. The results are also robust under the alternative econometrics estimation model of generalized method of moments (GMM)-Differenced.

The Impact of Oil Price Shocks on National Income: Evidence from Azerbaijan

This study investigates the influence of oil price shocks on GDP per capita, exchange rate, and total trade turnover in Azerbaijan using the Structural Vector Autoregressive (SVAR) method to data collected from 1992 to 2019. The estimation results of the SVAR method conclude that oil price shocks (rise in oil prices) affect GDP per capita and total trade turnover positively, whereas its influence on the exchange rate is negative in the case of Azerbaijan. According to results of this study, Azerbaijan and similar oil-exporting countries should reduce the dependence of GDP per capita, the exchange rate, and total trade turnover from oil resources and its prices in the global market. Therefore, these countries should attempt to the diversification of GDP per capita, the exchange rate, and other sources of total trade turnover.

Asymmetric volatility spillover between oil-importing and oil-exporting countries' economic policy uncertainty and China's energy sector

While the relationship between economic policy uncertainty(EPU) and energy market is of great interest to economist, previous research dose not differentiate the effect from oil-importing countries to oil-exporting countries' EPU on the a country's energy sector. In this paper, we address this issue by testing the effect of importer and exporter's EPU on the largest oil-importing country, China, as oil-importing affected greatly by the economic policy. TVP-FAVAR model is applied to obtain the factors and time-varying coefficients of 21 countries' EPU monthly indexes and energy stock realized volatility. We find that the Chinese energy sector's stock volatility is positively related to EPU shocks and that bad volatility has a stronger impact than good volatility. Second, the volatility spillover from oil-exporting countries' EPU on the Chinese energy sector is stronger than that from oil-importing countries' EPU, with a stronger effect for bad volatility than for good volatility. Finally, The bad volatility spillover and spillover asymmetry is stronger during the crisis periods, such as the debt crisis, energy contention, oil price turbulence, or limited production agreement, both symmetric and asymmetric spillovers increase. Our findings have potentially important implications for the regulators and investors on Chinese oil market with different types of countries' EPU.

A new look at the oil price-exchange rate nexus: Asymmetric evidence from selected OPEC member countries

In the present article, we contribute to the literature by applying a nonlinear autoregressive distributed lag (NARDL) method by Shin et al. (2014) to assess whether oil price fluctuations asymmetrically influence real exchange rates for oil-exporting countries, specifically selected six OPEC member countries. We discover that the price of crude oil seems to have an asymmetric effect on real exchange rates for the OPEC members with a floating exchange rate regime in both the long-and short-run. However, there is no evidence of the oil price asymmetry for the OPEC members with a fixed exchange rate regime in the long- and short-run. Thus, we conclude that asymmetry impacts appear to vary depending on the different types of exchange rate regimes in each of OPEC members.

Guillaume Fontaine, Cecilia Medrano e Iván Narváez. 2020. The Politics of Public Accountability. Policy Design in Latin American Oil Exporting Countries.

Guillaume Fontaine, Cecilia Medrano e Iván Narváez. 2020. The Politics of Public Accountability. Policy Design in Latin American Oil Exporting Countries.

Oil shocks and equity markets: The case of GCC and BRICS economies

This study analyzes the relationship between oil shocks and the equity markets of a group of world major oil producers and consumers encompassing both the GCC and BRICS economies. We employ a novel framework to decompose the oil shocks (demand, supply, and risk shocks) into their daily components. Subsequently, we also employ a network connectedness approach to investigate the static and time-varying connectedness of these shocks with equity markets. Our sample period ranges from January 6, 2005, to July 17, 2020. Empirical results show a medium connectedness between examined equity markets and oil shocks, in terms of returns and volatility, with an unpreceded level during the recent COVID-19 crisis. Furthermore, the volatility of oil-exporting countries contributes more to the volatility connectedness. Demand shock and risk shock are the main contributors to the connectedness. • We employ a novel framework to decompose the oil shocks into their daily components. • We show a medium connectedness between examined equity markets and oil shocks. • We document an unpreceded level of connectedness during the recent COVID-19 crisis. • Volatility of oil-exporting countries contributes more to the volatility connectedness. • Demand shock and risk shock are the main contributors to the connectedness.

Oil price uncertainty and industrial production in oil-exporting countries

This study documents the interdependence of oil price volatility on industrial production of emerging oil-exporting economies - Brazil, Mexico and 35 OECD countries (as proxy for the world). We used the oil price of West Texas Intermediate (WTI) for the price of oil and industrial production indices for economic activity or real output. The study used dynamic conditional correlation – generalized autoregressive conditional heteroskedasticity (DCC-GARCH) and corrected, cDCC-GARCH models for symmetric estimation and employs GJR-GARCH for asymmetric estimation. Bry and Boschan (1971) monthly (BBM) nonparametric dating for peaks and troughs of business cycles were obtained for industrial production of the countries under study. Results from DCC and cDCC parameters reveal that the dynamic linkages between oil price and industrial production (IP) in Brazil in Brazil and Mexico persistently co-move and the interdependence between oil price and IP of the world is temporary. The symmetric and asymmetric estimation results show that past news and lagged volatility depict a significant influence on the current conditional volatility of the variables. The study also reports that the corrected cDCC-GARCH truly endorses DCC-GARCH estimates and further reveals that the GJR-GARCH asymmetric model outperforms the symmetric GARCH models. The study, therefore, recommends that Brazil and Mexico should diversify their economies and heavily venture into non-oil exports for alternate revenues.

Environmental aspect of energy transition and urbanization in the OPEC member states.

More than any other nations, the crude oil-exporting countries and especially the Organization of the Petroleum Exporting Countries (OPEC) are likely to experience a more difficult energy-transitioning regime because of the economies' high dependence on crude oil revenue. By using the Pooled Mean Group (PMG) Autoregressive Distributed Lag Models (ARDL) approach, this study examines the impact of the energy transition albeit from conventional to clean energy on carbon emissions in 11 members of the OPEC. While engaging the aforementioned objective, the study further examined the validity of the Environmental Kuznets Curve (EKC) hypothesis amidst urbanization drive among the countries. The result from the long-run estimates shows that fossil fuel utilization exerts a positively significant on environmental degradation in the selected countries, while the observed negative impact of renewable energy utilization and urbanization on carbon dioxide emission (CO2) was insignificant in both the short and long run. The implication is that the current energy transition policy of the OPEC states is not sufficient at driving the states' environmental sustainability agenda. In addition, the EKC was not valid in the panel of the OPEC countries for the period of study, rather a U-shaped relation is established between income level and environmental degradation. Thus, this further posits that there is a setback in the push for environmental quality especially when there is an improvement in economic well-being through income growth in the OPEC states. Moreover, findings from the panel causality test show that there is no causality running from both fossil fuel and renewable energy consumption to the income level among the countries. On the contrary, a uni-directional causality was obtained from income level to renewable energy consumption, while urbanization strongly Granger causes fossil fuel use and CO2 emissions among the countries. As such, it is concluded that energy conservation policies can be implemented to reduce extreme dependence on fossil fuel use with little or no detrimental consequences, thus positioning the countries for economic prosperity in a sustainable environment.

Oil Price—Macroeconomy Causality: Evidence from Emerging Economies

This paper investigates whether changes in oil prices could explain cross-country variations in economic growth. The sample included WANA countries, China and India. The findings indicated bidirectional oil price-economy causality in the WANA region’s oil-exporting countries. In addition, a unidirectional causality running from changing oil prices to growth was found in the WANA region. However, there was no clear oil price-economy causal relationship for non-oil WANA countries, China and India. The study recommended diversification and fuel pricing reforms to create a robust fiscal balanced and sustained economic growth.

Oil Price Shocks and Economic Growth in Oil-Exporting Countries

The aim of this paper is to investigate how major net oil exporter economies react to oil price shocks. We contribute to the literature by considering, at the same time, the possible nonlinearity and asymmetry of this relationship with respect to sign, size and causes of the oil price shocks, as well as the state of the economy in which the shocks occur. We apply a Threshold Structural VAR approach, characterized by a separation of the observations into different regimes based on a threshold variable, to model time series non-linearities. We use the economic activity as the threshold variable, as it divides economic development in two regimes under which we expect the effects of oil price shocks to differ. First, We find that the effects of oil price shocks on oil exporting economies greatly depend on the underlying cause of the shocks as well as the state of the economy. Second, we find little evidence of asymmetric response of output to the sign of oil price shocks. Our main findings warn decision makers in the area of macroeconomic planning that, when making decisions based on the oil price, the underlying causes of its variations as well as the state of the economy in which the oil price shocks occur have to be considered.

Oil prices and fiscal policy in an oil-exporter country: Empirical evidence from Oman

This paper studies the impact of oil price shocks on fiscal policy and real GDP in Oman using new unexplored data. We find that an oil price shock explains around 22% and 46% of the variation in the government revenue and GDP, respectively. Decomposing the government revenue and GDP further into petroleum and non-petroleum related components, we find that an oil price shock explains around 26% of the variation in petroleum revenue and 90% of the petroleum-GDP. Though petroleum and non-petroleum GDP respond positively to oil price shocks, government expenditure is not affected by oil prices but is affected by government revenue. The results suggest that the Omani government uses its reserve fund and local and international debt to smooth and reduce the impact of oil price fluctuations.

Oil Prices and Fiscal Policy in an Oil-Exporter Country: Empirical Evidence from Oman

This paper studies the impact of oil price shocks on fiscal policy and real GDP in Oman using new unexplored data. We find that an oil price shock explains around 22% and 46% of the variation in the government revenue and GDP, respectively. Decomposing the government revenue and GDP further into petroleum and non-petroleum related components, we find that an oil price shock explains around 26% of the variation in petroleum revenue and 90% of the petroleum-GDP. Though petroleum and non-petroleum GDP respond positively to oil price shocks, government expenditure is not affected by oil prices but is affected by government revenue. The results suggest that the Omani government uses its reserve fund and local and international debt to smooth and reduce the impact of oil price fluctuations.

Causality between oil prices and exchange rates: a quantile-on-quantile analysis

This study examines the causal link between the crude oil price and the exchange rate in five major oil-exporting countries (Saudi Arabia, Russia, Canada, the United Arab Emirates and the United States) that have recently adopted different exchange rate policies. Using a nonlinear causality approach, quantile-on-quantile, with monthly data from April 1996 to January 2020, we find causal relationships between crude oil prices and exchange rates across quantiles in all of the countries studied. A plausible explanation for such findings is that these countries are oil exporters who depend largely on the proceeds of the oil trade. Any shocks in the oil market that affect oil production and price translate t exchange rate fluctuations in these countries. Meanwhile, the effect of the oil price on the exchange rate is diverse and heterogeneous depending on the country's level of crude oil production and consumption, its exchange rate policies and the strength of its economy.

A comparison of the impacts between Turkey and five selected developing economies during the global financial crisis

Purpose- We would like to examine the impacts of the global economic crisis on the Turkish economy and compare it with some other developing economies like Brazil, Russian Federation, India, China, and South Africa, namely the BRICS countries. We chose these countries because they are well-known developing countries in the world. Methodology- We compared the economic variables of unemployment rates, current deficit, GDP growth, and foreign direct investments for each country. Therefore, we obtained statistics from the World Bank and analyzed them. Findings- The banking and financial sector showed a similar trend in all countries. Developing countries did not take a direct hit to the banking sector because of robust regulations in the banking sector, relatively low toxic assets, and fiscal & monetary measures taken in developing countries. Consequently, country-specific factors played an essential role in some countries. Especially for South Africa, the FIFA World Cup held in 2010 was influential in offsetting the crisis’s adverse effects. Also, for the Russian Federation, Georgia’s occupation in 2008 led to the protest against Russian goods, and therefore demand for Russian goods decreased Conclusion- As a result, it is concluded that Turkey and the Russian Federation were directly hit by the crisis with substantial reductions in economic growth and unemployment rates. In China, India, Brazil, and South Africa, GDP growth and unemployment rates did not change greatly. Except for Turkey and the Russian Federation, other countries were not primarily affected by the global financial crisis. For the current account balance, there is a whole different scenario. Commodity and oil exporter countries like Russia were severely affected by decreasing oil prices in terms of the current account. Meanwhile, oil and commodity importer countries like Turkey were less damaged and had their lowest current account deficit in this era

(Testing the causality between Exports, Oil Rent, and Gross Domestic Product in Kuwait: An empirical study for the period (1980 -2017: اختبار السببية بين الصادرات وإيجار النفط والناتج المحلي الإجمالي في الكويت: دراسة تجريبية للفترة (1980 - 2017)

The study of the relationship between oil prices, exports, and economic growth has captured the interest of economists for decades, especially for oil-exporting countries. This study intends to determine the relationship and the direction of causation among oil rent, exports, and economic growth in the short-run and long-run, and the causation effects among the variables. Time series data collected from both the world bank and International Monetary Fund databases for the period 1980 to 2017. The series tested for stationarity, cointegration, and causation using the unit root, cointegration, and pairwise granger causality tests. The results revealed that there was a long-run association among the variables. On the other hand, causation only exists between export and economic growth in both directions. Eviews10 statistical software used for the analysis.

Oil price and the economic activity in GCC countries: evidence from quantile regression

Research background: The effects of oil price fluctuations on the macroeconomic performance in oil-importing and oil-exporting countries have stimulated considerable research activity. However, the debate is far from being closed.
 Purpose of the article: This paper revisits the impact of crude oil price on economic activity in the Gulf Cooperation Council oil-exporting countries. The study covers a relatively long period spanning from 1960 to 2018.
 Methods: The empirical investigation accounts for structural breaks, nonlinearity, and non-normal ?distribution of data. The Kapetanios (2005) structural breaks unit root test?? and ?Saikkonen?Lütkepohl (2000a, b, c) cointegration test with structural shifts are implemented to examine the stationary properties of data and the presence of cointegration between variables, respectively. Moreover, the quantile regression is employed to assess whether the impact of oil price on real GDP differs across different states of the economy.
 Findings & Value added: Empirical results suggest the absence of long-run cointegrating relationships between oil price and GDP in all countries. The quantile regression reveals that oil price does not affect real GDP in the same way across countries and for different business cycle phases. More specifically, the symmetric quantile regression findings reveal that oil price exerts a positive impact on GDP in all countries and that the effect is higher during the recession than expansion states. The asymmetric quantile regression shows that GDP reacts to positive oil price changes in all countries. However, only the Emirati and Omani GDPs are affected by negative oil price changes.

Geopolitical risk and crude oil security: A Chinese perspective

This paper employs the mixed-frequency vector autoregression (MF-VAR) to assess the causal relationship between geopolitical risk (GPR) and crude oil security (COS) for China. In contrast to prior papers, we regard GPR as an independent variable rather than including it in the indicator system and construct oil supply and price channels to better understand how GPR influences Chinese COS. The mixed-frequency data regression provides a new insight that quarterly geopolitical risk threatens Chinese oil security, and a time-varying nexus is discovered in different quarters within a one-year period. Therefore, the Chinese state-owned oil giants should implement diversified strategies such as equity acquisition and oil field investment to ensure a stable crude oil supply. China also needs to construct friendly relations with oil-exporting countries and join United Nations activities such as Somali escorts and peacekeeping in Africa to protect oil production and transportation. The establishment of crude oil futures dominated by the RMB is an effective way to strengthen oil affordability to cope with the oil price volatility caused by geopolitical instabilities.

Asymmetric effect of oil prices on stock market prices: New evidence from oil-exporting and oil-importing countries

This paper examines the short-run and long-run effect of oil prices across bullish, bearish, and normal states of the stock markets in oil-exporting and oil-importing countries where oil-exporting countries include Russia, Mexico, Venezuela, and Norway and oil-importing countries include India, China, Japan and Norway. For this purpose, we use quantile ARDL model and compare its findings with the standard nonlinear ARDL model. Moreover, this study uses quantile nonlinear ARDL model where oil price series is decomposed into positive and negative oil price shocks. The nonlinear ARDL estimates do not support co-integration in the long-run whereas, in the short-run, it supports asymmetric effect in all countries except Norway. Besides, the quantile ARDL estimates indicate that oil prices asymmetrically affect stock prices both in the short-run and long-run and for all sample countries. Finally, the empirical estimates of the quantile nonlinear ARDL model are consistent with the estimates from the quantile ARDL model. The findings of this study provide important policy implications for investors, policymakers and other stakeholders.

Evaluasi Rigless Plug & Abandonment: Sebuah Studi Kasus

Oil was explored and found by Royal Dutch (Shell Group) geologist in early 1900. And since Indonesia’s independence, development in oil and gas projects was able to put Indonesia as one of major oil exporter country with daily production above 1 Million barrel per day in 1970 – 1990. With time as fields become mature, some of the fields have come to the end of its life cycle, where mostly 70% of Indonesia total old oil wells will have no economic value and has to be permanently Plug and Abandonment (P&A) as ruled by the government. It’s part of decommissioning an entire field with environmental preservation which called Abandonment and Site Restoration (ASR). As P&A will impact operating company investment as outlined in Ministry of Energy and Mineral Resources (ESDM) No. 15, 2008, efficient P&A operation should be evaluated to ensure proper planning and executions. The subject of evaluation is X well located onshore at Y Field, Java, Indonesia. P&A operation with multiple cements plugs as barriers to ensure no fluids migrations from one formation to others, or to surface. Evaluation between workover rig and rigless P&A operation with coiled tubing unit (CTU) and electric line (E-line) will be presented in this paper to value the expenditures and achieving the result as standardize by the government with accordance of operating company standard. Results show that rigless operation is the preferable solution, which lead to cost effective operation. Rigless operation saves 25% of P&A operations even tough with longer operation days.

Oil price shocks and emerging stock markets revisited

PurposeThe study aims to understand the role of different streams of oil shocks (demand, supply and risk shocks) on the oil-importing and exporting countries' stock returns. The study also examines the impact of crude oil shocks across the economic regimes and market states. Besides, the role of the Global Financial Crisis (GFC) of 2008 in shaping the oil–stock relationship is also investigated.Design/methodology/approachThe authors revisit the impact of oil shocks on emerging equity markets by using the novel shock decomposition algorithm proposed by Ready (2018). The authors consider 24 emerging equity markets for the period spanning over July 15, 2002, to June 18, 2018, and bifurcate them based on oil dependence. The authors use rolling and dynamic conditional correlation analysis to understand the time-varying co-movements between oil prices and stock returns. The regime and state-specific dependence of stock returns on the structural oil shocks are captured by the Markov regime switching and quantile regression models.FindingsThe authors find that the demand shocks are positively associated with stock markets, whereas the supply shocks are negatively related, except in some of the oil-exporting countries. The risk-based shocks also appear to have a negative association with stocks. The authors do not find evidence of strong regime dependence and the direction of relationship across the high and low regimes is somewhat stable. Further, the authors observe an intense oil–stock relationship in the bearish market conditions. Besides, the authors also report evidences of changes in oil–stock relationship onset the GFC.Originality/valueThis is among the first studies to use the oil shock decomposition algorithm of Ready (2018) in the context of emerging equity markets. Additionally, oil shocks' role on the stock market movements across the regimes and market states is studied comprehensively. Thus, the nature of oil shock and the extent to which the emerging markets are exposed is observed in this study.