Iranian-Oil-Free Zone and International Oil Prices
Mohammad Reza Farzanegan () and
Mozhgan Raeisian Parvari
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Mozhgan Raeisian Parvari: University of Vienna
MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)
Abstract:
One of the main elements of economic sanctions against Iran due to its nuclear and military programs is crude oil exportation restrictions in addition to investment in Iranian energy related projects. Senders of such sanction are interested in understanding the impacts of such embargos on international oil prices. We apply unrestricted Vector Autoregressive (VAR) model, using impulse response (IRF) and variance decomposition (VDA) tools with annual data from 1965 to 2012 to analyze the dynamic response of international oil prices to Iranian oil export sanction. Controlling for the supply of non-Iranian oil and the world GDP per capita, we show that international oil prices respond positively to negative changes of the Iranian oil expor, our proxy of Iran oil sanctions. However, the increasing response of oil prices to the Iranian oil sanction is only significant in the first year after negative shock in Iran oil exports. Beyond the first year following shock, we do not observe a statistically significant response of oil prices.
Keywords: Oil Price; VAR Model; Sanction; Iran Handle: RePEc:mar:MAGKSE:201427 (search for similar items in EconPapers)
JEL-codes: E37 Q32 Q34 Q38 Q43 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ara, nep-cwa and nep-ene
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Citations: View citations in EconPapers (28)
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http://www.uni-marburg.de/fb02/makro/forschung/mag ... -2014_farzanegan.pdf First 201427 (application/pdf)
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Journal Article: Iranian-Oil-Free Zone and international oil prices (2014) 
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201427
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