The Impacts of Geopolitical Risks on the Energy Sector: Micro-Level Operative Analysis in the European Union

Ronnie Figueiredo (), Mohammad Soliman, Alamir N. Al-Alawi and Maria José Sousa
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Ronnie Figueiredo: Centre of Applied Research in Management and Economics (CARME), School of Technology and Management (ESTG), Polytechnic of Leiria, 2411-901 Leiria, Portugal
Mohammad Soliman: Head of Scientific Research Department, University of Technology and Applied Sciences, Salalah P.O. Box 74, Oman
Alamir N. Al-Alawi: Assistant Dean for Academic Affairs & Scientific Research, University of Technology and Applied Sciences, Salalah P.O. Box 74, Oman

Economies, 2022, vol. 10, issue 12, 1-12

Abstract: Energy prices play a crucial role in combating geopolitical risks, especially for the major suppliers of energy resources. However, energy prices display a bilateral relationship with geopolitical risks in any economy. Any hike in the price of energy stimulates geopolitical risk factors and visa-versa. The consequences adversely impact economies and bring forth international tensions. This paper bridges a gap between the influence of geopolitical risks relating to energy and international tensions by analyzing micro-level operational measures. We deploy an empirical model to predict the energy sector and possible risk factors incorporating Eurostat data on twenty-seven states, from 2011 to 2020. This study collected a different energy variable to support the multiple regression model constructed by the “blocks” (hierarchical linear regression) method. The results suggest that geopolitical risks cause adverse effects on both the energy and other corporate sectors. The future direction of this research is to estimate how statistical model relationships may assist the corporate sector, and investors, in adopting mitigating measures to control upcoming geopolitical risks due to energy risks caused by geopolitical unrest.

Keywords: geopolitical risks; energy; international tension; micro-level operations (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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