The Relationship between Geopolitical Events and the Crude Oil Prices: An Application of ARDL Model

Saleh Obadi and Matej Korcek
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Matej Korcek: Institute of Economic Research, Slovak Academy of Sciences, Å ancová Ä . 5681105 Bratislava, Slovakia

International Journal of Energy Economics and Policy, 2024, vol. 14, issue 5, 85-97

Abstract: This paper aims to explore the short-run and long-run relationship between geopolitical events and crude oil prices for the period 2000-2023. In addition to geopolitical events, we included the market factors whose data were available in the right part of the equation. To investigate long-run cointegration, this paper used quarterly data and employed the Autoregressive distributed lagged (ARDL) bounds testing approach developed by (Pesaran et al., 2001). Study findings from the ARDL bound testing approach confirm the existence of a long-run and short-run association between geopolitical events and crude oil prices. Furthermore, the findings from the ARDL model revealed that, among others, world crude oil production; OECD’s crude oil stocks, and OECD economic growth have a significant effect on the dependent variable (crude oil prices) both in the long run and short run.

Keywords: Geopolitical Factors; Oil Prices; ARDL Model; Oil Supply and Demand; Cointegration (search for similar items in EconPapers)
JEL-codes: C32 P27 P28 Q41 Q43 (search for similar items in EconPapers)
Date: 2024
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