Oil Price Variations Research Articles

Study of the impact of crude oil prices on economic output and inflation in Saudi Arabia

Our work analyses the effects of oil price changes on economic output and inflation in Saudi Arabia by employing both linear and nonlinear autoregressive distributed lag models over the period 1980–2021. The results report that crude oil price changes have only asymmetric impacts on economic output in Saudi Arabia. The increases in crude oil price result in higher output growth in the long run whereas their decreases do not have impact on output growth in both the short and long run. Crude oil price variations (increases or decreases) have symmetric impacts on inflation in both the short and long run in Saudi Arabia. The rises in crude oil prices induce higher inflation whereas their decreases lead to lower inflation in both the short and long run. Appreciation of Saudi currency can lead to higher inflation only in the short run. Thus, Saudi authorities should accompany the changes in oil prices by some policies to combat inflationary pressures and their consequences.

Causes of Exchange Rate Volatility

This study examined the determinants of exchange rate volatility basing evidence on 7 African countries; Niger, Sudan, Cameron, Equatorial Guinea, Tunisia, Congo, and Cote D’Ivoire from 1990-2023. The study conducted the Autoregressive Distributive Lag (ARDL) bounds testing for co-integration and also estimated the error correction model. Furthermore, ARCH and GARCH models were analyzed to measure the volatility of a time series by fitting an autoregressive model to the squared residuals of the time series. The ARCH and GARCH results suggest the volatility of the exchange rate markets in the aforementioned countries is not random. The speed of adjustment of the volatility in the exchange rate of the Sudanese economy is 39%, in Niger Republic it is 50%, in Cameroon it is 52%, in Tunisia it is 55%, in Congo the speed is 32%, in Equatorial Guinea, the speed of adjustment is 58% and in Côte D’Ivoire the speed is 45%, respectively. The study found that the determinants of exchange rate volatility among African countries vary depending on the specific country. The observed volatility in the Sudanese exchange rate was anchored by the significant positive influence of inflation and income differentials as well as the significant negative influence of interest rate differential. In Niger Republic, exchange rate volatility was driven by the significant positive influence of productivity growth and money supply as well as the significant variation in oil prices and interest rate differentials. The observed short-run volatility in Cameroon's exchange rate was significantly and positively influenced by inflation differential and money supply variation whereas it was significantly but negatively propelled by interest rate differential and oil price shock. In Tunisia, exchange rate volatility was stimulated by the significant positive influence of inflation differential, productivity growth, oil price shock, and the significant negative role played by trade balance. The observed short-run volatility in the Congolese exchange rate was induced by the significant positive impact of inflation differential, income differential, trade balance, variation in money supply, and the significant negative impact of interest rate differential. In Equatorial Guinea, the observed exchange rate volatility was determined based on the significant and positive impact of differential in the inflation rate, oil price shock, changes in the money stock, and the foreign balance of trade. The observed volatility in the Côte D’Ivoire exchange rate was significantly and positively driven by the differentials in inflation rate, interest rate, and income level, the foreign trade balance but significantly stimulated by the negative influence of oil price shock. The general policy advice is that governments of all the countries covered by the study should implement exchange rate controls to limit the volatility of their currency fluctuation by imposing a limit on the amount of foreign currency that can be traded in the country. African governments should monitor the inflation differential between their own country and their trading partners to see if it is becoming too large. If it is, the government might raise interest rates to make its currency more attractive to investors.

Oil Price-Exchange Rate Interdependence: Relevance of Theory of Exchange Rate Overshooting in Nigeria

This article investigated the interdependence between crude oil variability and foreign exchange rate changes in Nigeria. Oil price variability is decomposed into fluctuation on Brent Oil, West Texas Intermediate, OPEC Basket Reference Crude Oils and Bonny Light Crude Oil Price Variability. All the data that used in this research come from secondary sources. Annual time series data for Nigeria are used from 1993 to 2022. The research design for the study is ex post facto research analysis of annual multivariate time series data. The study examined the historical data in order to understand the current state of foreign exchange rate in Nigeria and causal connections crude oil price variability using ARDL Bound test, Johansen approach and Error-Correction Mechanism (ECM) models. In the long run, the coefficient of oil price volatility shows a positive and significant relation with the f o r e i g n e x c h a n g e r a t e at 10 percent level of significance. This implies that a 10 percent, increase in oil price volatility induces foreign exchange rate by 0.61 percent. The positive coefficient of oil price volatility tends to reveal that Dornbusch (1976) Overshooting hypothesis of foreign exchange rate holds for Nigeria. This finding is in conformity with previous studies like (Driskill & McCafferty, 1982); Turnovsky & Bhandari, 1982; Driskill & McCafferty, 1982). Furthermore, the coefficient of BOP and OPEC show a negative and insignificant relationship with the foreign exchange rate in the long run. This implies that BOP and OPEC hav e no impact on foreign exchange rate. This is in contrast with economic theory particularly Dutch diseases proposition and in conformity with foreign exchange rate overshooting theory. The negative nexus can be blamed on the inability of government to manage the foreign exchange supply and demand effectively in the country. Diversifying away from oil to other non-oil activities that would generate foreign exchange sh

Oil Subsidy, Corruption Risk, Midstream and Downstream Oil Revenue in Nigeria: Problem, Prospects and Methodology

The exploratory research identified the problem and prospects on the oil subsidy corruption risk and downstream oil revenue in Nigeria. The study focused mainly on the revenue generated from oil refining, storing, marketing, distribution and sale of petroleum products with the purpose of investigating Nigeria’s oil subsidy payments and its effects on the growth of downstream oil revenue and finding out if the level of corruption affects the downstream oil revenue sustainability in Nigeria. It is revealed that the following factors could explain downstream oil revenue and models are conceptualized that landing cost of PMS, poverty index, demand for local consumption, refining capacity and official pump price global oil price and exchange rate variation are probable significant variables in determining the volume of oil revenue in the downstream sector in Nigeria. A quantitative study and methodology are recommended to evaluate the impact of fuel oil subsidy and corruption indices on the dependent variable (downstream oil revenue) with a view to predicting and forecasting a sustainable and dependable oil revenue in refining, storing, marketing and distribution of petroleum products in Nigeria

Financial stability nexus with oil prices shocks and business cycle uncertainty during COVID-19: empirical trends of ASEAN economies.

This study aims to analyze the correlation between financial stability, oil price shocks, and business cycle uncertainty in the economies of the Association of Southeast Asian Nations (ASEAN) amidst the COVID-19 pandemic. This study examines the interplay and effects of various factors on the economic resilience of the ASEAN region, utilizing data from ten-member countries spanning the years 2002 to 2022. The results underscore the notable impact of oil price shocks on financial systems' stability, suggesting that oil price variations have the potential to disrupt financial markets, particularly in the context of the ongoing pandemic. Moreover, the research illustrates that the presence of business cycle uncertainty amplifies the negative consequences of oil price shocks, thereby heightening their influence on the financial system's stability. The study also uncovers a robust correlation between the COVID-19 pandemic and heightened levels of business cycle uncertainty within the ASEAN economies. The ongoing global pandemic has increased market volatility, a deceleration in economic growth, and disruptions in supply chains, generating a heightened sense of uncertainty within the business landscape. As a result, the heightened level of uncertainty has impeded the efficacy of monetary and fiscal policies in preserving financial stability.

Oil Theft and Violence in Mexico

Around the world, non-state armed actors have been linked to the illegal extraction of energy resources. This research note explores the case of Mexico. Anecdotal evidence suggests that criminal groups have been gaining control of energy infrastructure across the country. At the same time, oil tapping has been directly associated with criminal violence. Yet, there has not been a systematic effort to causally identify the relationship between illegal extraction and criminal violence. In this research note, we use the exogenous variation in international oil prices—as a measure of potential profits—to assess the effect of access to energy infrastructure on criminal-related violence. Our results show that increases in oil prices are associated with higher levels of homicide rates in municipalities with pipelines and in neighboring municipalities. Specifically, a standard price increase during this period is associated with approximately 20% more homicides per year in municipalities with gasoline pipelines. A locality-level analysis suggests a non-linear distance effect. Finally, we also explore criminal fragmentation as the mechanism connecting access to resources and violence. We find that access to pipelines is associated with higher presence of organized crime groups, but not necessarily with more fragmentation.

Demand for Indonesian Patchouli Oil Exports: the Panel Autoregressive Distributed Lag (Ardl) Approach

Purpose: This study aims to analyze the demand for oil exports and determine the short-term and long-term impact of patchouli oil price variables, per capita income of patchouli oil export destinations, and the real exchange rate on Indonesia's patchouli oil export demand. Theoretical framework: is supported by literature on demand of patchouli oil export Method/design/approach: This study employed panel ARDL regression (Autoregressive Distributed Lag) on data from 2006 - 2021 Results and conclusion: All variables significantly adversely affected the export demand over the long term but not the short term. Research implications: The Indonesian government is advised to carry out more intensive policies on the patchouli oil price variable to increase demand for patchouli oil exports in various countries so that the gap between world prices and export prices can be adjusted. It is also recommended that the central or regional government be able to establish various cooperations between countries so that world patchouli oil prices could remain stable, with the hope of increasing state revenues and demand for Indonesian patchouli oil exports. Originality/value: Indonesia is a country whose economy is supported by the export sector of agricultural commodities, one of which is patchouli oil exports. Because this sector greatly contributes to the national economy, it is important to analyze the determinants of demand for patchouli oil exports.

The Dynamic Relationship among Domestic Stock Returns Volatility, Oil Prices, Exchange Rate and Macroeconomic Factors of Investment

This study investigates the impact of oil price variations, exchange rates, macroeconomic factors and domestic stock volatility in South Asian countries. This study employs a general autoregressive heteroskedastic (GARCH) model using quarterly data from 2001 to 2021. The results reveal that there is a significant relationship between the domestic stock of credit and macroeconomic factors. We find surprising results for the set of the countries; there is a negative impact of asset portfolio investment in the domestic stock for Afghanistan, Bangladesh, India and Pakistan and a positive effect for the remaining countries. There is a positive impact on the economic growth in the majority of countries with the exception of Afghanistan and Bangladesh. Inflation seems to increase while there is an increase in the credit in the economy except for Bangladesh, Bhutan and Nepal. Exchange rate has a negative impact on the domestic stock except for India and Nepal. Further, there is a positive effect on the interest rate spread in Bangladesh, India and Pakistan. Finally, oil prices have a significant impact on exchange rates within the countries’ investments.

The Impact of Crude Oil Price Fluctuations on Indian Economy

Abstract: The importance of Crude Oil has been on a rise in almost every single economy around the world. As economies grow, the requirement of this very vital resource is also fattening at a rapid pace. The Indian economy is rapidly expanding, as is its reliance on crude oil. For the period 2001-02 to 2020-21, the article investigates the reasons for changes in Crude Oil prices, as well as their implications for Indian Economic Development and GDP Growth. Because of the spike in crude prices, India's fuel and diesel prices have reached all-time highs. The current Indian economy is thriving despite rising trade disparities and persistent inflation. The goal of this study is to see how speculation and variations in crude oil prices affect Indian economic development, GDP growth, retail gasoline prices, financial markets (BSE), currency, and government finances. The study looked at how changes in oil prices affect Indian economic development via a variety of networks, including GDP, trade and investment characteristics, and other macroeconomic indicators.

Analisis Contagius Effect Menggunakan Garch Model: Bukti dari Asia Tenggara

This study aims to investigate the impact of the dynamic relationship dynamics during the Covid-19 pandemic between gold prices, oil prices and stock returns in Asean-5 countries related to the contatagion effect theory with evidence using GARCH Models analysis. The types of samples in this study are saturated samples, namely Gold prices, Oil prices, Composite Stock Price Index (Indonesia) JCI, Kuala Lumpur Composite Index/KLCI (Malaysia), Straits Times Singapore (STI), Securities Exchange of Thailand Index/SETI (Thailand). ), and the Philippine Stock Exchange/PSE (Philippines), during the Covid-19 pandemic, from March 11, 2020 to October 30, 2021, totaling 430 samples. The analytical technique used in applying the GARCH model in this study uses the Eviews 10 software program, with the results for the gold dependent variable the results state that the Indonesian Composite Stock Index (IHSG), Kuala Lumpur Composite Index (KLCI), STI (Singapore), Securities Exchange Thailand Index/SETI (Thailand), and Philippine Stock Exchange/PSE (Philippines), have a consistent relationship with the price of Gold, the contingent theory of effects is proven to occur in 5 countries in the sample. As for the dependent variable oil, the results state that the price of the oil price variable is only the theory of contingent effects, which has been proven to occur in 4 countries and has not been proven to occur in the Kuala Lumpur Composite Index (KLCI) Malaysia.

The Pandemic Waves’ Impact on the Crude Oil Price and the Rise of Consumer Price Index: Case Study for Six European Countries

This study examines the response of the Consumer Price Index (CPI) in local currency to the COVID-19 pandemic using monthly data (March 2020–February 2022), comparatively for six European countries. We have introduced a model of multivariate adaptive regression that considers the quasi-periodic effects of pandemic waves in combination with the global effect of the economic shock to model the variation in the price of crude oil at international levels and to compare the induced effect of the pandemic restriction as well and the oil price variation on each country’s CPI. The model was tested for the case of six emergent countries and developed European countries. The findings show that: (i) pandemic restrictions are driving a sharp rise in the CPI, and consequently inflation, in most European countries except Greece and Spain, and (ii) the emergent economies are more affected by the oil price and pandemic restriction than the developed ones.

Changes in Crude Oil Price under the Russia-Ukraine Conflict and Dynamics of Stock Market in G7 Countries

On 24 February 2022, the conflict between Russia and Ukraine, due to the war, caused the stock market with greater sensitivities to the change of crude oil prices. This paper studies the effect of crude oil on G7 countries’ stock markets before and after the Russian-Ukrainian conflict. Using a VAR model, impulse response plots are constructed to measure the extent of crude oil price impacts on stock prices in seven countries, and an ARMA-GRCH-X model is applied to measure the correlation between the prices of crude oil and stocks in seven countries. This study shows that variations in crude oil prices have the greatest influence on the stock markets of France, German, and Italy, with the UK following. The impact on the stock markets of Japan, Canada, and the US is relatively small. The results of the ARMA-GARCH-X model examination demonstrate that the prices of crude oil have a remarkable positive correlation with the stock markets of France, Germany, and Italy. This study shows that during the Russia-Ukraine conflict, stock markets were more influenced by the prices of crude oil and stock investors are advised to invest with caution during war.

Petrol Fiyatları ile Seçilmiş Makroekonomik Değişkenlerin Hisse Senedi Piyasasına Asimetrik Etkileri: Türkiye Örneği

This paper investigates the asymmetric impacts of crude oil prices and other selected macroeconomic variables on the Turkish stock market for the period between 2005:01-2021:06 through the combination of the NARDL model and the quantile regression approach. The findings support the existence of cointegration between the stock market and oil prices. The variations in oil prices have asymmetric impacts in the long run. A positive shock by 1% decreases stock returns by 0.67%, while oil price declines have no significant impact. Quantile regressions show that the effects of oil price shocks are more visible at the low levels of the stock market.

Estimating effects of nominal exchange rates and oil price shocks in the presence of structural breaks

Macroeconomic stability is an objective emerging economy desired to achieve but oil price shocks and fluctuations in nominal exchange rates tend to restrain the ability of these economies to achieve such macroeconomic balance. Regrettably, exchange rates and oil price shocks are prone to have structural breaks in defined periods. We therefore, implemented a bivariate diagonal BEKK model, Zivot-Andrews and Bai-Perron breakpoint tests to evaluate the effect of exchange rates and oil price shocks in the presence of structural breaks on macroeconomic stability in developing countries. Break dates were observed for Benin Republic and Côte d’Ivoire between 1997M01 and 1996M09, Gambia in 2003M12, Niger in 2011M04, Ghana in 2000 and 2008, and Nigeria in 2020. All break dates were attributed to various causes including COVID-19 pandemic, the United States (US) invasion of Iraq in 2003, the US recession, and the Persian Gulf crisis. The findings showed variations in oil prices and exchange rates have a hostile impact on the level of the consumer price index (CPI) after controlling for structural breaks for all countries excluding Burkina Faso. Hence, shocks conveyed significant instability in the domestic price levels of Gambia, Benin, Niger, Ghana, and Nigeria. Models of inflation should be examined after controlling for external crises and structural breaks.

Threshold of currency devaluation and oil price movements that stimulates industrial production

Even though oil prices are not subject to manipulations by individual countries, instability in the same generates shocks that other variables respond to, yet amid these shocks, more units of local currencies in developing countries are needed to acquire foreign inputs for production. Fluctuating oil prices consequently imply that high prices would increase the cost of production and ultimately reduce the purchasing power of industries. This study ascertains threshold effects of exchange rate devaluation and changes in oil prices on the industrial output of thirty developing countries using threshold and nonlinear autoregressive distributed lag (NARDL) regressions. Results revealed percentage rise above the devaluation threshold caused a fall in production by 4.36 percent. Oil prices within this devaluation region negatively affected output. Below and within the devaluation threshold of 0.692, the relationship patterns switch with oil price variability attracting positive and significant effects, while devaluation impacted industrial output positively with a substantial magnitude of 0.334. A higher devaluation was met with lower output in the industrial sector. In this higher region, increased oil prices weaken devaluation effects by 91.882. When a currency falls more than it is obtainable in the threshold (6.9 percent), oil prices cut output by a larger magnitude than it stimulated positively when the devaluation rate did not surpass the threshold value.

Pengaruh Harga Minyak dan Suku Bunga Terhadap Harga Saham Sub Sektor Makanan Minuman di BEI

This study aims to analyze the effect of oil prices and interest rates on stock prices of manufacturing companies in the food and beverage sub-sector listed on the IDX. The study uses quantitative research methods which are carried out through data collection with secondary data, the population is the Financial Statements of food and beverage manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2016-2021 period. The sample in this study is in the form of balance sheets and profit/loss reports for manufacturing companies in the food and beverage sector listed on the Indonesia Stock Exchange (IDX) for the 2016-2021 period, data analysis using multiple Linear Regression statistical methods and hypothesis testing. The results show that 1) The oil price variable has no effect on the stock price of manufacturing companies in the food and beverage sub-sector listed on the Indonesia Stock Exchange (IDX) for the period 2017-2021 2) The interest rate variable has an effect on stock prices in manufacturing companies in the food and beverage sub-sector. beverages listed on the Indonesia Stock Exchange (IDX) for the period 2017-2021

Oil prices, labour market adjustment and dynamic quantile connectedness analysis: evidence from Greece during the crisis.

This paper examines the spillover effects transmission mechanism between oil prices, oil price uncertainty and oil price volatility on labour market in Greece, using static and dynamic quantile connectedness methodology (Diebold and Yilmaz Diebold and Yilmaz, Int J Forecast 28:57-66, 2012; Ando et al. Ando T, Greenwood-Nimmo N, Shin Y (2018) 'Quantile connectedness: Modelling tail behavior in the topology of financial networks', Working Paper. https://ssrn.com/abstract=3164772.). There is empirical evidence that the oil price variable is the most influential node of the energy variables on hirings and firings, suggesting the endogeneity of the labour market variables. Rolling estimation analysis based on the quantile VAR to capture the volatility spillovers across the whole conditional distribution shows a large variation of the total connectedness index, which is responsive to exogenous adverse and beneficial shocks. Further, our results point to a strong effect due to the COVID-19 pandemic and the state intervention to sustain the pandemic on the labour market. Overall, the analysis reveals a substantial higher time-varying connectedness of the system at the tails of the distribution, indicating that changes in energy markets asymmetrically affect the Greek labour market in recessionary and flourishing states of the economy, rather than normal times.

The Impact Analysis of the Variation in the Price of Oil and the Exchange Rate on the Optimal Quantity of Orders in the Zinc Importing Companies in Colombia

This paper analyses the impact of oil price and exchange rate variations on the economic order quantity (EOQ) of the zinc importing industry in Colombia. As a methodology, a vector autoregressive model (VAR) is applied, which allows quantifying how the variation of one variable impacts another in a dynamic system of equations. The results show a negative impact on EOQ by exchange rate revaluation due to increased import costs. On the other hand, oil price increments generate growth in the EOQ because the peso appreciates, purchasing imported raw materials inexpensive.

Oil Price Fluctuations and its Impact on Current Account in Nigeria

This study investigates the relationship between oil price fluctuations and Nigeria’s current account balances from 1987 to 2021. Current account is a pivotal macroeconomic variable that is used to measure the economic performance of a country. This current account is itself a record of all of a country’s national and international transactions and oil price is one of the major factors that determines the value and volume of transactional movements in a country. This is largely the case with Nigeria, which is a country that is heavily reliant on oil. This study adopted a time series analysis by investigating time series data and the Autoregressive Distributed Lag (ARDL) was used to estimate the correlation between oil price variations and current account in the short and long runs. The findings showed that oil price had a positive but insignificant effect on current account in the short run while it had a negative but significant impact on the current account in the long run. In terms of the other determinants of current account which were examined in this study, it was discovered that population growth rate and trade had an insignificant correlation with current account balances in the short run while GDP and oil prices had significant impacts on current account balances in the long run. These findings inform the conclusion of this study that current account is a viable metric for measuring Nigeria’s economic performance as well as policy making. To gain greater economic stability, this study recommended that there is a need to strategically position Nigeria’s economy towards other forms of revenue rather than oil so as to reduce the impact of oil price fluctuations on the country’s current account balances and the economy at large.

Unexpected economic growth and oil price shocks

Profit-maximizing oil producers base their production schedules on expected economic growth which usually has impacts on oil demand. However, in the wake of unexpected economic growth, oil price shocks can ensue, when no additional oil supply meets unexpected demand. This paper examines whether and how unexpected economic growth could explain oil price shocks. Forecasting errors of mainstream institutions which represent the global market are employed to measure unexpected economic growth and oil price shocks. We find that because the market underestimated China's economic prospects, it is not the strong economic growth but the unexpected growth that raised the oil price during 2000–2008. Afterwards, this impact was on the wane, possibly due to the enhanced accuracy in economic growth expectations for China. Lower-than-expected economic growth might lead to the decline in the real oil price after 2014. The results emphasize the role of expectation in oil price variations.