Geopolitical Tensions, OPEC News, and Oil Price: A Granger Causality Analysis

Carlos A. Medel ()

MPRA Paper from University Library of Munich, Germany

Abstract: To what extent geopolitical tensions in major oil-producer countries and unexpected news related to the Organisation of the Petroleum Exporting Countries (OPEC) affect oil price? What are the effects of non-market externalities in oil price? Are oil price forecasters aware or affected by such externalities when making their predictions? In this article, I analyse the influence of these events on oil price by means of Granger causality, using a unique measure of geopolitical events accounting for supply disruptions for the 2001-12 period. I found evidence favouring OPEC countries'-related news as an oil price driver jointly with supply disruptions influencing short-term forecasts, and reducing the consensus when unanticipated news are available. When considering separately OPEC news or other supply disruptions, the evidence is rather episodic.

Keywords: Oil-producer countries; OPEC; oil price; Granger causality (search for similar items in EconPapers)
JEL-codes: C12 C22 E66 Q41 (search for similar items in EconPapers)
Date: 2015-07-17
New Economics Papers: this item is included in nep-ene and nep-mac
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Related works:
Journal Article: Geopolitical tensions, OPEC news, and the oil price: A granger causality analysis (2020)
Working Paper: Geopolitical Tensions, OPEC News, and Oil Price: A Granger Causality Analysis (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:65667

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