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

Author

Listed:
  • Saleh Mothana Obadi

    (Institute of Economic Research, Slovak Academy of Sciences, Å ancová Ä . 5681105 Bratislava, Slovakia)

  • Matej Korcek

    (Institute of Economic Research, Slovak Academy of Sciences, Å ancová Ä . 5681105 Bratislava, Slovakia)

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.

Suggested Citation

  • Saleh Mothana Obadi & Matej Korcek, 2024. "The Relationship between Geopolitical Events and the Crude Oil Prices: An Application of ARDL Model," International Journal of Energy Economics and Policy, Econjournals, vol. 14(5), pages 85-97, September.
    • Handle: RePEc:eco:journ2:2024-05-9
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Geopolitical Factors; Oil Prices; ARDL Model; Oil Supply and Demand; Cointegration;
    All these keywords.

    JEL classification:

    • P27 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Performance and Prospects
    • P28 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Natural Resources; Environment
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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