The Impact of Economic Sanctions and War-Related Uncertainty on Oil Market Volatility: Evidence from the Russia-Ukraine War

Imlak Shaikh, Leena Ajit Kaushal and Priyanka Vallabh
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Imlak Shaikh: Management Development Institute Gurgaon, Gurugram, Haryana, India
Leena Ajit Kaushal: Management Development Institute Gurgaon, Gurugram, Haryana, India
Priyanka Vallabh: Management Development Institute Gurgaon, Gurugram, Haryana, India

American Business Review, 2025, vol. 28, issue 2, 361-388

Abstract: Economic sanctions engender the disturbance of financial transactions between the sanctioner and the targeted nations. The Russia-Ukraine war also restricted Russia's entry into financial and commodity markets, with reverberating effects on the global market. Hence, the study aims to elucidate the relationship between armed conflicts and economic sanctions enforced by the G7 nations, the crude oil market, and its corresponding volatility index, OVX. It seems that heightened levels of ambiguity, conflict, nervousness, and hostility have contributed to an increase in the fluctuation of the energy market, leading to an extreme response to economic sanctions. Our findings reveal that financial restrictions imposed by Australia, Japan, the UK, and the USA have led to higher uncertainty and increased volatility in the oil market. The news variable War exhibits higher volatility compared to Crude oil and Recession in the media press. The war-induced uncertainty has shown a significant impact on the oil volatility.

Keywords: Crude Oil; Economic Sanctions; Oil Market Volatility; Policy Uncertainty; War (search for similar items in EconPapers)
JEL-codes: F51 G14 G41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ambsrv:021853

DOI: 10.37625/abr.28.2.361-388

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