Do Tense Geopolitical Factors Drive Crude Oil Prices?
Geopolitical factors are considered a crucial factor that makes a difference in crude oil prices. Over the last three decades, many political events occurred frequently, causing short-term fluctuations in crude oil prices. This paper aims to examine the dynamic correlation and causal link between ge...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2020-08-01
|
| Series: | Energies |
| Subjects: | |
| Online Access: | https://www.mdpi.com/1996-1073/13/16/4277 |
| _version_ | 1797557238415491072 |
|---|---|
| author | Fen Li Zhehao Huang Junhao Zhong Khaldoon Albitar |
| author_facet | Fen Li Zhehao Huang Junhao Zhong Khaldoon Albitar |
| author_sort | Fen Li |
| collection | DOAJ |
| description | Geopolitical factors are considered a crucial factor that makes a difference in crude oil prices. Over the last three decades, many political events occurred frequently, causing short-term fluctuations in crude oil prices. This paper aims to examine the dynamic correlation and causal link between geopolitical factors and crude oil prices based on data from June 1987 to February 2020. By using a time-varying copula approach, it is shown that the correlation between geopolitical factors and crude oil prices is strong during periods of political tensions. The GPA (geopolitical acts) index, as the real factor, drives the rise in prices of crude oil. Moreover, the dynamic correlation between geopolitical factors and crude oil prices shows strong volatility over time during periods of political tensions. We also found unidirectional causality running from geopolitical factors to crude oil prices by using the Granger causality test. |
| first_indexed | 2024-03-10T17:14:31Z |
| format | Article |
| id | doaj.art-c96df1d520b34291880807564d3f29c2 |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-03-10T17:14:31Z |
| publishDate | 2020-08-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-c96df1d520b34291880807564d3f29c22023-11-20T10:33:59ZengMDPI AGEnergies1996-10732020-08-011316427710.3390/en13164277Do Tense Geopolitical Factors Drive Crude Oil Prices?Fen Li0Zhehao Huang1Junhao Zhong2Khaldoon Albitar3School of Marxism, Hunan Institute of Technology, Hengyang 421001, ChinaGuangzhou Institute of International Finance, Guangzhou University, Guangzhou 510405, ChinaSchool of Economics and Commerce, South China University of Technology, Guangzhou 510006, ChinaAccounting and Financial Management, Portsmouth Business School, Portsmouth PO1 3DE, UKGeopolitical factors are considered a crucial factor that makes a difference in crude oil prices. Over the last three decades, many political events occurred frequently, causing short-term fluctuations in crude oil prices. This paper aims to examine the dynamic correlation and causal link between geopolitical factors and crude oil prices based on data from June 1987 to February 2020. By using a time-varying copula approach, it is shown that the correlation between geopolitical factors and crude oil prices is strong during periods of political tensions. The GPA (geopolitical acts) index, as the real factor, drives the rise in prices of crude oil. Moreover, the dynamic correlation between geopolitical factors and crude oil prices shows strong volatility over time during periods of political tensions. We also found unidirectional causality running from geopolitical factors to crude oil prices by using the Granger causality test.https://www.mdpi.com/1996-1073/13/16/4277GPR indextime-varying copulaGranger causality testextreme political actsdynamic correlation |
| spellingShingle | Fen Li Zhehao Huang Junhao Zhong Khaldoon Albitar Do Tense Geopolitical Factors Drive Crude Oil Prices? Energies GPR index time-varying copula Granger causality test extreme political acts dynamic correlation |
| title | Do Tense Geopolitical Factors Drive Crude Oil Prices? |
| title_full | Do Tense Geopolitical Factors Drive Crude Oil Prices? |
| title_fullStr | Do Tense Geopolitical Factors Drive Crude Oil Prices? |
| title_full_unstemmed | Do Tense Geopolitical Factors Drive Crude Oil Prices? |
| title_short | Do Tense Geopolitical Factors Drive Crude Oil Prices? |
| title_sort | do tense geopolitical factors drive crude oil prices |
| topic | GPR index time-varying copula Granger causality test extreme political acts dynamic correlation |
| url | https://www.mdpi.com/1996-1073/13/16/4277 |
| work_keys_str_mv | AT fenli dotensegeopoliticalfactorsdrivecrudeoilprices AT zhehaohuang dotensegeopoliticalfactorsdrivecrudeoilprices AT junhaozhong dotensegeopoliticalfactorsdrivecrudeoilprices AT khaldoonalbitar dotensegeopoliticalfactorsdrivecrudeoilprices |