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Unveiling the impact of geopolitical conflict on oil prices: A case study of the Russia-Ukraine War and its channels

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  • Zhang, Qi
  • Yang, Kun
  • Hu, Yi
  • Jiao, Jianbin
  • Wang, Shouyang

Abstract

The Russia-Ukraine War, which has lasted for over a year, has been proven to significantly impact crude oil prices. This article aims to explore the channels through which the Russia-Ukraine War affects crude oil prices and to assist decision-makers in channel intervention to mitigate the impact of the war. To this end, the study proposes a research method called “Compare Real Data with Predicted Data and Match Influencing Factors” (CRP-MIF). The method reveals that the Russia-Ukraine War, through its impact on speculative activities, inventory, and supply-demand balance, combined with production announcements of Organization of the Petroleum Exporting Countries (OPEC), led to sharp short-term fluctuations in international oil prices and rapid price increases. Among these channels, speculative activities, inventory, and supply have a substantial impact. Relevant entities can weaken the impact of the war on oil prices and macroeconomic factors by intervening in these transmission channels. This study provides a new reference paradigm for studying the impact channels of major crisis events on commodity prices.

Suggested Citation

  • Zhang, Qi & Yang, Kun & Hu, Yi & Jiao, Jianbin & Wang, Shouyang, 2023. "Unveiling the impact of geopolitical conflict on oil prices: A case study of the Russia-Ukraine War and its channels," Energy Economics, Elsevier, vol. 126(C).
    • Handle: RePEc:eee:eneeco:v:126:y:2023:i:c:s0140988323004541
    DOI: 10.1016/j.eneco.2023.106956
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    3. Zhou, Wei-Xing & Dai, Yun-Shi & Duong, Kiet Tuan & Dai, Peng-Fei, 2024. "The impact of the Russia-Ukraine conflict on the extreme risk spillovers between agricultural futures and spots," Journal of Economic Behavior & Organization, Elsevier, vol. 217(C), pages 91-111.

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