OPEC Countries Research Articles

Relationship between Oil Exports, Renewable Energy Consumption, Agriculture Industry, and Economic Growth in Selected OPEC Countries: A Panel ARDL Analysis

Relationship between Oil Exports, Renewable Energy Consumption, Agriculture Industry, and Economic Growth in Selected OPEC Countries: A Panel ARDL Analysis

Assessment of the Logistics Performance Index of OPEC Countries with ENTROPY,CRITICandLOPCOW-basedEDASMethods

Assessment of the Logistics Performance Index of OPEC Countries with ENTROPY,CRITICandLOPCOW-basedEDASMethods

International political aspects of OPEC+ activities in the context of energy diplomacy of Russia and Saudi Arabia before and after the start of the special military operation

The growing interstate rivalry sweeps more and more areas of international relations, including energy issues. While the ‘traditional’ oil and gas exporters are trying to maintain or even strengthen their current positions, new players in the oil and gas market are trying to challenge the status quo. The changing situation on the oil market due to the ‘price war’ between the United States and OPEC countries serves as a clear manifestation of this trend and encourages the OPEC members to coordinate their policies more closely with external partners. This paper aims to identify the prerequisites and assess the dynamics of cooperation between Russia and the Kingdom of Saudi Arabia (KSA) within the OPEC+ framework. The first section of the paper examines the logic behind the OPEC+ agreement in the context of the development of energy cooperation between the Russian Federation and the KSA before the outbreak of the Ukrainian crisis. The authors note that the new format demonstrated stability within the first years of its existence and generated closer cooperation between the hydrocarbon exporting countries. The second section examines the development of OPEC+ in the face of increased geopolitical pressure from the United States and its allies. The authors conclude that the efforts of Washington and oil importing countries to undermine energy cooperation within the OPEC+ format have not succeeded, on the contrary the international stance of the group members has only strengthened. In conclusion, the authors emphasize that OPEC+ not only contributes to the stability of energy prices, but also brings tangible political benefits to its members. At the same time, according to the authors, the future of this format largely depends on the dynamics of international environment and, particularly, on the scale of the US-Russian confrontation.

Examining the Drivers of Environmental Sustainability in OPEC Countries: A Symbiotic Influence Index-STIRPAT-Kaya-EKC Approach

Examining the Drivers of Environmental Sustainability in OPEC Countries: A Symbiotic Influence Index-STIRPAT-Kaya-EKC Approach

Effect of energy consumption, foreign direct investment, and economic growth on greenhouse gas emissions in OPEC member states: evidence from panel data analysis

Our paper explores the impact of energy consumption, foreign direct investment, and economic expansion on greenhouse gas emissions in OPEC member states. A panel data of 12 out of 13 OPEC nations over the period 1983 to 2022 obtained from the World Development Indicators is used. The autoregressive distributed lag simulation was adopted to determine the correlation among the series. Our estimations unveil that economic growth in the member states contributes 7.47 per cent to greenhouse gas emissions for every 1 percent increase, trade flow tends to reduce greenhouse gas emissions by 0.37 per cent for every 1 percent rise. Though the impact of foreign direct investment on greenhouse gas emissions in the OPEC member states is negative, it is statistically insignificant. The positive association between energy consumption and greenhouse gas emissions emphasizes the need for OPEC countries to move to cleaner energy sources in order to reduce environmental damage. A proactive approach to investing in clean technology is critical for governments and companies in OPEC countries. This includes supporting research and development of renewable energy sources, encouraging the adoption of environmentally-safe practices in industry and fostering innovation to promote sustainable development. Strict environmental standards for industries that contribute significantly to greenhouse gas emissions should be adopted and enforced. This includes: Setting caps on emissions, advocating for cleaner production processes, and imposing penalties for non-compliance with environmental regulations. Sustainable practices should be encouraged through tax incentives, subsidies, and other financial mechanisms designed to incentivized companies to adopt environmentally friendly processes. The implications of these findings for policymakers and future studies are discussed.

Stock price index analysis of four OPEC members: a Bayesian approach

This study examines the relationship between macroeconomic variables and stock price indices of four prominent OPEC oil-exporting members. Bayesian model averaging (BMA) and regularized linear regression (RLR) are employed to address uncertainties arising from different estimation models and variable selection. Jointness is utilized to determine the nature of relationships among variable pairs. The case study spans macroeconomic variables and stock prices from 1996 to 2018. BMA findings reveal a strong positive association between stock price indices and both consumer price index (CPI) and broad money growth in each analyzed OPEC country. Additionally, the study suggests a weak negative correlation between OPEC oil prices and the stock price index. RLR results align with BMA analysis, offering insights valuable for policymakers and international wealth managers.

Evolution, resilience and causes of global petroleum gas trade networks: 1995–2020

Based on the HS 4-digit code trade data in UNCOMTRADE from 1995 to 2020, this paper analyzes the characteristics of the evolution of the global PG trade network using the complex network approach and analyzes the changes in its resilience at the overall and country levels, respectively. The results illustrated that: (1) The scale of the global PG trade network tends to expand, and the connection is gradually tightened, experiencing a change from a “supply-oriented” to a “supply-and-demand” pattern, in which the U.S., Russia, Qatar, and Australia have gradually replaced Canada, Japan, and Russia to become the core trade status, while OPEC countries such as Qatar, Algeria, and Kuwait mainly rely on PG exports to occupy the core of the global supply, and the trade status of other countries has been dynamically alternating and evolving. (2) The resilience of the global PG trade network is lower than that of the random network and decreases non-linearly with more disrupted countries. Moreover, the impact of the U.S. is more significant than the rest of countries. Simulations using the exponential random graph model (ERGM) model revealed that national GDP, institutional quality, common border and RTA network are the determinants of PG trade network formation, and the positive impact of the four factors not only varies significantly across regions and stages, but also increases with national network status.

From oil reliance to financial resilience: have economic sanctions made OPEC countries’ healthcare financing independent from oil?

From oil reliance to financial resilience: have economic sanctions made OPEC countries’ healthcare financing independent from oil?

Oil prices and the load capacity factor in African oil-producing OPEC members: Modeling the symmetric and asymmetric effects

Most oil-producing economies are heavily dependent on oil. Although this situation allowed some of them to grow rapidly, particularly during high oil prices, it may have adverse environmental repercussions. The purpose of this research is to empirically investigate the symmetric and asymmetric effects of oil prices on the load capacity factor in seven African oil-producing OPEC countries between 1990 and 2018. The paper employs the PMG-ARDL model to estimate the symmetric effects of oil prices, while the asymmetric effects are obtained using the PMG-NARDL. The empirical findings suggest slope heterogeneity and cross-section dependence, while the Westerlund cointegration test confirms the existence of a significant long-run relationship. The PMG-ARDL test reveals no evidence of significant symmetric effects of oil prices on the load capacity factor in the short- and long-run. On the contrary, the PMG-NARDL model indicates that the load capacity factor is negatively affected by oil price increases, with short-run effects exceed long-run effects. These results still hold when employing the CS-ARDL and CS-NARDL models. Moreover, the results suggest the validity of the Load Capacity Curve hypothesis with a turning point ranging between 6674 and 7623 dollars per capita. Finally, the causality analysis confirms the previous results, as the load capacity is only caused by oil price increases.

Does environmental quality react asymmetrically to unemployment and inflation rates? African OPEC countries' perspective.

Environmental degradation, inflation, and unemployment are unquestionably among the current global issues. However, there has not been an in-depth investigation of how unemployment and inflation rates affect environmental quality, particularly when considering the asymmetric scenario in oil-producing countries. This gap in the literature motivated this study to investigate how the environment (proxied by CO2 emissions) reacts to asymmetric shocks in inflation and unemployment rates using the panel NARDL model methodology. This study also examines whether the environmental Phillips curve (EPC) hypothesis holds true in the context of African OPEC countries over the period 1990 to 2019. The study presents three interesting findings. First, CO2 emissions are adversely associated with unemployment and inflation rates, meaning that protecting a healthy environment would have to come at the expense of two undesirable outcomes: losing employment and a decline in purchasing power. Second, the asymmetry analysis demonstrates that both negative unemployment and positive inflation shocks have a larger effect on CO2 emissions than the opposite scenario. Finally, long-term evidence exists to support the presence of the EPC in these countries.

An application of copulas to OPEC’s changing influence on fossil fuel prices

This work examines how the dependence structures between energy futures asset prices differ in two periods identified before and after the 2008 global financial crisis. These two periods were characterized by a difference in the number of extraordinary meetings of OPEC countries organized to announce a change of oil production. In the period immediately following the global financial crisis, the decrease in oil prices and oil and gas demand forced OPEC countries to make frequent adjustments to the production of oil, while, since the first quarter of 2010, the recovery led to more regular meetings, with only three organized extraordinary meetings. We propose to use a copula model to study how the dependence structure among energy prices changed among the two periods. The use of copula models allows to introduce flexible and realistic models for the marginal time series; once marginal parameters are estimated, the estimates are used to fit several copula models for all asset combinations. Model selection techniques based on information criteria are implemented to choose the best models both for the univariate asset prices series and for the distribution of co-movements. The changes in the dependence structure of couple of assets are investigated through copula functionals and their uncertainty estimated through a bootstrapping method. We find the strength of dependence between asset combinations considerably differ between the two periods, showing a significant decrease for all the pairs of assets.

U.S. Strategic Energy Interests and Tactics for Their Implementation Amid the COVID-19 Pandemic and Russia's Special Military Operation in Ukraine

Relevance. Relations between states, due to either energy cooperation or confrontation, have entered the most acute phase since the beginning of the XXI century, since competition in this industry has become a leading element of the foreign policy of world powers. The purpose is to consider the stages of formation and development of the US energy strategy in the current conditions of world politics.Objectives: to study the activities of us presidents in the context of the implementation of the country's energy interests; to study the legal framework of the US energy dominance in different countries and continents: highlight the significant tactical steps of the US government in the field of realizing the country's energy interests.Methodology. The application of the method of document analysis made it possible to identify the strategic priorities of the policy of the US governments in their dynamics. The retrospective method of analyzing US policy made it possible to prove the idea of the purposeful participation of the US military departments in ensuring the national security of the country in the economic sector.Relevance. The dynamics of the US energy strategy is analyzed on the example of the activities of its presidents from the end of the twentieth century to the present, which showed the transformation of the country's energy strategy from regional dominance, from the position of a net importer of energy resources to global dominance and transformation into a net exporter of energy resources through economic (development of shale deposits), military (expansion of NATO bases in the regions of oil and gas production) and diplomatic (summits, sanctions), etc.Conclusions. Thus, the energy boom leads to a change in the geopolitical alignment of forces in the world, a decrease in the influence of OPEC countries on the formation of oil prices. The shale revolution is at the heart of a fundamental shift in the balance of power. All this makes it possible for the United States to reduce dependence on energy imports and expand freedom of action in Europe, the Middle East, and Central Asia.

Investigating the Short- run and Long-run Causality Relationship between the Exchange Rate Regime and the Real Exchange Rate Misalignment in the OPEC Countries

Investigating the Short- run and Long-run Causality Relationship between the Exchange Rate Regime and the Real Exchange Rate Misalignment in the OPEC Countries

Transformation of Russian Oil Sales Markets Taking Into Account Sanctions Pressure

Against the background of the sanctions pressure of the coalition of G7 countries, the European Union and Australia (hereinafter referred to as the coalition) on the Russian energy sector, the introduction of a “ceiling” of prices for the sea transportation of Russian oil, starting from December 5, 2022, it is necessary to transform the traditional flows of oil cargo from Russia to the countries of the Asia-Pacific region. In this regard, in order to identify the potential for the growth of supplies to friendly countries, it is important to assess the existing capacity of pipeline capacities and Russian sea terminals for oil transshipment. In the article, the author analyzes the cargo flows of oil from Russia in the direction of the countries that are part of the coalition, formed proposals for changing the markets for Russian energy resources, taking into account the sanctions pressure, and drew conclusions about the possibilities of diversifying the existing cargo flows of Russian oil. According to the author, Russia could build a dialogue, without violating the sanctions regime, with friendly countries, in order to actually take the share of OPEC countries in the Asia-Pacific market, while OPEC countries will reimburse the supplies of fallen Russian resources to the EU countries at market, not “ceiling” prices.

Government healthcare financing and dwindling oil prices: Any alternatives for OPEC countries?

Crude oil is one of the sources by which budgets are financed in OPEC countries. However, the fall in oil prices in 2014 put their governments’ finances under significant pressure. Healthcare was one of the sectors experiencing fiscal strain. This study examined the effect of a fall in oil prices on healthcare financing in eight OPEC countries and whether such financing has shifted away from the dependence on oil. Quantitative healthcare expenditure data from the WHO covering the period from 2003 to 2019 were evaluated using a comparison of means Welch’s t-test. The result showed that government healthcare expenditure in Iran, Venezuela, and Kuwait increased in the period post-2014 compared to the expenditure after 2008 and 2002, suggesting that these countries succeeded in shielding such spending against the fall in oil prices. By contrast, the United Arab Emirates, Saudi Arabia, Iraq, Nigeria, and Algeria did not, highlighting that they have not yet moved from dependence on oil. With the economic uncertainty caused by oil fluctuations, global political and economic developments, and the world transitioning to green energy, oil-dependent countries should free their governments’ healthcare expenditure from dependence on such sources of funding. Furthermore, they should not focus on temporary plans by shifting the burden to private spending at a time of falling oil prices, but to utilize different financing approaches.

Environmental Sustainability in Selected OPEC Countries: Do the Influence of FDI and ICT Matter?

Considering the undeniable role and importance of the environment in people's lives, the present study is designed to investigate the combined effect of information and communication technology (ICT) and foreign direct investment (FDI) on achieving environmental sustainability. Since the increasing emission of carbon in society and its destructive environmental effects on social economic aspects and even political tensions have become a challenge, the main question of the research is what strategies have governments, especially oil exporting countries, used in the past to reduce the level they have discovered pollution and what policies do they want to follow in the future? Among the policies undertaken by the OPEC oil exporting countries, has the action for foreign direct investment (FDI) and the development of information and communication technology (ICT) been effective in preventing harmful environmental effects? For this purpose, data on renewable energy consumption, the intensity of use of information and communication technology, foreign direct investment (FDI), and urbanization have been used as explanatory variables, and carbon dioxide (CO2) emission as a dependent variable. The target countries selected are oil exporting countries (OPEC) for the period 2000 to 2020, and the analysis method used is panel VAR. The results showed that creating a shock in FDI, labor force, urban population, and renewable energy consumption decreases CO2 while creating a shock in Gross capital formation increases CO2. The impact of shock of ICT on CO2 is also insignificant and can be ignored. The results of variance analysis also showed that urban population, labor force, and FDI variables have the largest contribution in explaining the behavior of CO2; therefore, it is necessary to pay attention to FDI and try to increase the attraction of foreign direct investment to reduce CO2 in OPEC countries. JEL: C23, F43, F64.

Трансформация мирового рынка нефти: драйверы и перспективы

The world oil market is in the process of profound transformation. Under the influence of both long-term trends and recent exogenous shocks in the form of the global coronavirus pandemic and the geopolitical crisis around Ukraine, global oil demand, world oil production and trade in crude oil and petroleum products are being transformed in real time. The main driver of the restructuring of the oil market is the approaching risk of peak of global oil demand. On the supply side strengthening the position of the United States in world oil production, which is the result of technological breakthroughs in the methods of tight oil extraction is observed. The short-term elasticity of oil supply has increased markedly. Sluggish dynamics of global demand for oil against the backdrop of an expanding opportunity for a rapid increase in oil production have significantly reduced the risk of a shortage of oil supply, at least in the medium term. This forces the OPEC countries, which are in dire need of maximizing oil export revenues in order to maintain acceptable economic growth rates, to restrain oil production at the expense of their market niche. Western sanctions against the Russian oil and gas sector provoked a reorientation of Russian oil exports to the markets of friendly and nonaligned countries, primarily to India and China, as well as Turkey. In Europe, the former niches of Russian oil are taken by the United States and OPEC countries. To avoid the risks of falling under secondary sanctions, importers of Russian oil buy it with a price discount. In fact, world oil trade has taken a dual structure: the vast majority of oil is traded using market price quotations, while at the same time, a segment of trade in relatively cheap oil has emerged. Until 2022, this segment was formed by Iranian and Venezuelan oil, but it was much more modest in terms of absolute volume. The parallel existence of two segments in the world oil trade led to sharpening of competition between oil exporters. A return to normality could be a new shock for the oil market.

THE GLOBAL POLICY AND OIL PRICE: MODERN ENERGY POLICY IN OPEC PRIORITIES

The article is devoted to the current problem of modern energy policy in the priorities of OPEC countries. In particular, the influence of pandemic and geopolitical situations in the world on the oil market is investigated. One of the most important areas for the international community is energy, which is one of the main guarantors of universal security in the modern world. The agreement to reduce oil production by OPEC and non-OPEC countries has become the most significant example of international multilateral cooperation in the energy sector in recent years. During 2017-2020, the OPEC+ agreement managed to stabilise the oil market significantly. In 2017, the average price of Brent on the market reached a new agreement from 1 May 2020 to 1 May 2022. The list of participants has been significantly expanded. In addition to the 24 OPEC+ countries, a number of G-20 countries supported the deal, including the USA, which, although not formally part of the cooperation due to legal specifics, expressed their willingness to help stabilise the situation on a voluntary basis. This was an unprecedented signal to the market. To date, the purpose of OPEC is to coordinate activities and develop a common policy regarding oil production among the member countries of the organization, maintain stable oil prices, ensure stable supply of oil to consumers, get return on investment in the oil industry. In addition, an important mission of OPEC is to coordinate and standardize the oil policies of member countries, determine the most effective collective means of protecting the interests of producing countries, and cooperate with non-OPEC countries, which include Russia, Norway, and Mexico, in order to implement initiatives to stabilize the global oil market. This article examines the effectiveness of OPEC in shaping oil prices and its ability to manage the conditions created by pandemic situations and the impact of the oil market on the current geopolitical processes taking place on the world stage.

What are the effects of economic globalization on CO2 emissions in MENA countries?

This paper explores whether economic globalization is (de)carbonizing the MENA region. Based on a comprehensive econometric analysis including ARDL and NARDL models for a panel of 17 MENA countries over the 1980–2018 period, it reveals the existence of asymmetric long-term impacts of economic globalization on CO2 emissions. As economic globalization increases, CO2 emissions increase, but the effect is much stronger for trade globalization than for financial globalization. On the other hand, the decrease in globalization has no effect. The study also shows that, the effects of financial globalization are different between OPEC and non-OPEC MENA countries. It appears that financial globalization pushes OPEC MENA oil-exporting countries to reduce their CO2 emissions with the transfer of technologies and the development of their financial market. These different results between OPEC and non-OPEC MENA countries allow us to propose differentiated policies for these two groups of countries. • In the MENA region, economic globalization has asymmetrical environmental impacts. • Globalization is carbonizing whereas deglobalization has no effect on CO2 emission for MENA countries. • The effect of globalization on CO2 emission is much stronger for trade globalization than financial globalization. • Financial globalization increases CO2 emissions in non-OPEC MENA countries and helps OPEC MENA countries to reduce them.

EVALUATING ECONOMIC FREEDOM VIA A MULTI-CRITERIA MEREC-DNMA MODEL-BASED COMPOSITE SYSTEM: CASE OF OPEC COUNTRIES

Economic freedom indicators create a beneficial and suitable guide and a crucial reference for investors, policymakers, lenders, and market researchers worldwide. In light of these indicators, the economic freedom performances of countries can be determined. The Heritage Foundation annually releases a ranked list of the country based on their performance in terms of fourteen economic freedom criteria with equal weights through a simple aggregation approach. According to an average-based aggregator, equal weight of economic freedom criteria and calculating rank of countries cannot be a completely reliable approach. Thus, this work establishes a composite index system in the form of a decision support system that employs the method based on the removal effects of criteria (MEREC) and the double normalization-based multi-aggregation (DNMA) to specify the economic freedom levels of the OPEC countries. MEREC obtains the importance weights of indicators without the interference of any stakeholder or decision-makers. Afterward, DNMA, as a novel ranking multi-criteria method, is applied to sort countries based on their performance against all economic freedom criteria. This is the first attempt in the literature to calculate the index of economic freedom utilizing an integrated multi-criteria decision support model. Whereas “investment freedom” is the most significant indicator of economic freedom, the UAE is in the best position in terms of economic freedom among OPEC countries. A fourphased sensitivity control is also performed so as to verify the robustness and usefulness of the developed decision tool.