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The Impact of Political Tensions and Geopolitical Risks on Oil Prices in Unstable Environments

Author

Listed:
  • Jamel Saadaoui

    (University of Paris 8)

Abstract

This note explores the impact of geopolitical relationships between the US and China on the oil price. Using time-varying local projections, my analysis reveals that these dynamic effects are unstable over time. Indeed, these effects have been more observable since the global financial crisis, with China being increasingly perceived as a threat in the U.S. Instability is detected around the onset of the COVID-19 pandemic. During this period, geopolitical risks and political tensions influence oil price at different time horizons.

Suggested Citation

  • Jamel Saadaoui, 2024. "The Impact of Political Tensions and Geopolitical Risks on Oil Prices in Unstable Environments," Working Papers 2024.13, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2024.13
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    References listed on IDEAS

    as
    1. Cai, Yifei & Mignon, Valérie & Saadaoui, Jamel, 2022. "Not all political relation shocks are alike: Assessing the impacts of US–China tensions on the oil market," Energy Economics, Elsevier, vol. 114(C).
    2. Chen, Hao & Liao, Hua & Tang, Bao-Jun & Wei, Yi-Ming, 2016. "Impacts of OPEC's political risk on the international crude oil prices: An empirical analysis based on the SVAR models," Energy Economics, Elsevier, vol. 57(C), pages 42-49.
    3. Baumeister, Christiane, 2023. "Pandemic, War, Inflation: Oil Markets at a Crossroads?," CEPR Discussion Papers 18347, C.E.P.R. Discussion Papers.
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    5. Christiane Baumeister & James D. Hamilton, 2019. "Structural Interpretation of Vector Autoregressions with Incomplete Identification: Revisiting the Role of Oil Supply and Demand Shocks," American Economic Review, American Economic Association, vol. 109(5), pages 1873-1910, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Time-Varying Local Projections; China; Oil Price; Political Relations; Geopolitical Risks; Global Financial Crisis; COVID-19 pandemic;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

    NEP fields

    This paper has been announced in the following NEP Reports:

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