MODELING WORLD NATURAL GAS AND CRUDE OIL TRADE NETWORKS

Masoud Shirazi and Jurica Šimurina
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Masoud Shirazi: Faculty of Economics, University of Coimbra, Coimbra, Portugal & Cyprus Institute of Marketing, Nicosia, Cyprus

Ekonomski pregled, 2023, vol. 74, issue 1, 132-157

Abstract: World energy security is sensitive to stable energy environment and geopolitics that depend on inter-regional energy trade strategies. However, this study uses the network connectedness measures of Diebold-Yilmaz to find the trade cooperation/competition preference for non-renewables’ security development. To this end, the dynamic asymmetries of weighted spillover effects of natural gas and crude oil trade flow components are analyzed throughout world trade networks before- and after the sharp fall in crude oil prices. The results exhibit that natural gas and crude oil trade networks experience asymmetric- and time-varying behavior in response to transitoryvs. permanent components as well as positive- vs. negative shocks pre-and post- sharp fall in crude oil prices. Specifically, the natural gas and crude oil trade networks show a lesser degree of integration after 2014. Moreover, the natural gas trade network represents more (less) weighted sensitivity to short-term fluctuations (long-term trend) than the crude oil trade network pre-and post- 2014. As the other comparative result, a higher (lower) degree of integration is detected in the crude oil trade network in response to the positive (negative) shocks compared to the natural gas trade network pre-and post- 2014. Therefore, a lower level of cooperation preference among regions is proposed in the natural gas and crude oil trade networks in response to a sharp fall in crude oil prices. Also, decisions about energy conservation, environmental protection, and protection of strategic resources can affect a region’s natural gas and crude oil supply and demand security.

Keywords: Energy Trade Strategy; Asymmetric Spillover Effects; Dynamic Network Connectedness Measures (search for similar items in EconPapers)
JEL-codes: C22 D81 Q37 Q47 (search for similar items in EconPapers)
Date: 2023
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