The Economic Effects of Tensions in Energy Transportation

Hugo Morão

No 2025/0384, Working Papers REM from ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa

Abstract: This paper tackles the urgent issue of how tensions in energy transportation impact oil markets and the global economy. The study introduces an energy transportation uncertainty index, developed from over 50 global newspapers, to monitor fluctuations in uncertainty associated with significant events such as the Tanker War, major US sanctions, the Exxon Valdez oil spill, the Nord Stream sabotage, the Colonial pipeline cyberattack, and various Gulf incidents. Using a structural vector autoregression (SVAR) model, the analysis shows that these fluctuations in transportation uncertainty cause increases in real oil prices due to supply chain challenges. While oil production dips initially due to perceived risks, it quickly rebounds, though inventories are heavily used. These shocks also heighten geopolitical tensions and reduce global industrial output.

Keywords: Supply chain disruptions; Energy transportation uncertainty; Geopolitical risks; Oil markets; Uncertainty shocks; SVAR. (search for similar items in EconPapers)
JEL-codes: C32 D80 E32 F51 L95 N70 Q43 (search for similar items in EconPapers)
Date: 2025-07
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Persistent link: https://EconPapers.repec.org/RePEc:ise:remwps:wp03842025

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