Crude oil bubbles

Gökhan Kartal

Chapter 21 in Elgar Encyclopedia of Energy Economics, 2025, pp 75-81 from Edward Elgar Publishing

Abstract: This entry employs the Generalized Sup ADF (GSADF) and Backwards Sup ADF (BSADF) tests to identify speculative bubbles in oil prices, analyzing data from January 1964 to January 2024 with 601 months of observation. The empirical findings uncover notable bubble formations marked by abnormal oil price increases, coinciding with 12 speculative bubble periods that align with geopolitical tensions like the Iranian Revolution, Iran–Iraq War, OPEC oil price collapse, global financial crises, and COVID-19 pandemic. The entry provides nuanced insights into factors contributing to oil market bubbles, based on empirical evidence, shedding light on the interplay of geopolitical events, macroeconomic conditions, and speculative behaviors. The insights gained from this research provide valuable contributions to understanding oil market dynamics, potentially supporting risk management and informing policy decisions, while also serving as a foundational resource for policymakers, analysts, and researchers, aiding in the development of robust risk management strategies and potentially guiding future research endeavors in this field.

Keywords: Crude Oil; Speculative Bubbles; Oil Market Dynamics; GSADF; BSADF (search for similar items in EconPapers)
Date: 2025
ISBN: 9781035310364
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