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A Global Oil Market Model with Shipping Costs

Author

Listed:
  • Christina Anderl
  • Guglielmo Maria Caporale

Abstract

This paper investigates the role of shipping costs in global crude oil and refined petroleum markets and their effects on regional and country-level inflation and real activity. For this purpose a Global VAR (GVAR) model is estimated jointly for the oil and refined petroleum markets; this includes the Baltic Dirty Tanker Index (BDTI) and the Baltic Clean Tanker Index (BCTI) as measures of the cost of shipping crude oil and refined petroleum commodities, respectively. The results suggest that shocks to the cost of shipping petroleum commodities have a particularly severe negative impact on real economic activity and on petroleum consumption in most regions, while shocks to the price of crude oil and petroleum have inflationary effects, especially in oil-importing countries. Further, it appears that the relationship between commodity prices and their respective shipping costs has broken down since the beginning of the Covid-19 pandemic. Specifically, a counterfactual analysis shows that the pandemic moved the prices of crude oil and petroleum and their costs of shipping in opposite directions.

Suggested Citation

  • Christina Anderl & Guglielmo Maria Caporale, 2024. "A Global Oil Market Model with Shipping Costs," CESifo Working Paper Series 11551, CESifo.
    • Handle: RePEc:ces:ceswps:_11551
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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11551.pdf
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    More about this item

    Keywords

    oil markets; petroleum prices; shipping costs; Baltic Dirty Tanker Index (BDTI); Baltic Clean Tanker Index; Global VAR (GVAR); real economic activity; inflation; Covid-19 counterfactual;
    All these keywords.

    JEL classification:

    • 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
    • F47 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Forecasting and Simulation: Models and Applications
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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