How Political Tensions and Geopolitical Risks Impact Oil Prices?

Valérie Mignon (valerie.mignon@parisnanterre.fr) and Jamel Saadaoui

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: This paper assesses the effect of US-China political relationships and geopolitical risks on oil prices. To this end, we consider two quantitative measures — the Political Relationship Index and the Geopolitical Risk Index — and rely on structural VAR and local projections methodologies. Our findings show that improved US-China relationships, as well as higher geopolitical risks, drive up the price of oil. Positive shocks on the political relationship index are associated with optimistic expectations regarding economic activity, whereas positive shocks on the geopolitical risk index reflect fears of supply disruption. Political tensions and geopolitical risks are thus complementary factors, the former being linked to the demand side and the latter to the supply side.

Keywords: Oil prices; political relationships; geopolitical risk; China. (search for similar items in EconPapers)
JEL-codes: C32 F51 Q4 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cna, nep-ene, nep-pol and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://beta.u-strasbg.fr/WP/2023/2023-15.pdf (application/pdf)

Related works:
Journal Article: How do political tensions and geopolitical risks impact oil prices? (2024)
Working Paper: How Do Political Tensions and Geopolitical Risks Impact Oil Prices? (2024)
Working Paper: How Do Political Tensions and Geopolitical Risks Impact Oil Prices? (2023)
Working Paper: How Do Political Tensions and Geopolitical Risks Impact Oil Prices? (2023)
Working Paper: How Do Political Tensions and Geopolitical Risks Impact Oil Prices? (2023)
Working Paper: How political tensions and geopolitical risks impact oil prices? (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2023-15

Access Statistics for this paper

More papers in Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg Contact information at EDIRC.
Bibliographic data for series maintained by (webmaster@cournot.u-strasbg.fr this e-mail address is bad, please contact repec@repec.org).