Search Results (128)

For a long time, the explanation of the various determinants of oil price fluctuations and their impact on economic activity has been based on the supply and demand mechanism. However, with various volatile changes in the international situation in recent years, such as threats to public health and an increase in regional conflicts, special attention has been paid to the geopolitical context as an additional driver of oil price fluctuations. This study examines the relationship between oil price changes and GDP growth and other macroeconomic variables from the perspective of the vulnerability of oil-importing and oil-exporting countries to unexpected oil price shocks, driven by tense geopolitical events, in three European countries (Norway, Germany, and Poland). We apply the Structural Vector Autoregressive (SVAR) model and orthogonalized impulse response functions, based on quarterly data, in regard to two samples: the first spans 1995Q1–2019Q4 (pre-2020 sample), with relatively gradual changes in oil prices, and the second spans 1995Q1–2024Q2 (whole sample), with sudden fluctuations in oil prices due to geopolitical developments. A key finding of this research is that vulnerability to unpredictable oil price shocks related to geopolitical tensions is higher than in regard to expected gradual changes in oil prices, both in oil-importing and oil-exporting countries. Different causality patterns and stronger responses in regard to GDP growth during the period, including in regard to tense geopolitical events in comparison to the pre-2020 sample, lead to the belief that economies are not more resilient to oil price shocks as has been suggested by some studies, which referred to periods that were not driven by geopolitical events. Our research also suggests that countries implementing policies to reduce oil dependency and promote investment in alternative energy sources are better equipped to mitigate the adverse effects of oil price shocks. Full article

Globalization and the spread of technological innovations have made world markets and economies increasingly unified and conditioned by international trade, not only for sales markets but above all for the supply of raw materials necessary for the functioning of the production complex of each country. Alongside oil and gold, the main commodities traded include industrial metals, such as aluminum and copper, mineral products such as gas, electrical and electronic components, agricultural products, and precious metals. The conflict between Russia and Ukraine tested the unification of markets, given that these are countries with notable raw materials and are strongly dedicated to exports. This suggests that commodity prices were able to influence the stock markets, especially in the countries most closely linked to the two belligerents in terms of import-export. Given the importance of industrial metals in this period of energy transition, the aim of our study is to analyze whether Industrial Metals volatility affects G7 stock markets. To this end, the BEKK-GARCH model is used. The sample period spans from 3 January 2018 to 17 September 2024. The results show that lagged shocks and volatility significantly and positively influence the current conditional volatility of commodity and stock returns during all periods. In fact, past shocks inversely influence the current volatility of stock indices in periods when external events disrupt financial markets. The results show a non-linear and positive impact of commodity volatility on the implied volatility of the stock markets. The findings suggest that the war significantly affected stock prices and exacerbated volatility, so investors should diversify their portfolios to maximize returns and reduce risk differently in times of crisis, and a lack of diversification of raw materials is a risky factor for investors. Full article

This study employs asymmetric quantile regression to investigate the asymmetric impact of WTI crude oil prices and economic policy uncertainty (EPU) on stock market returns from May 2014 to December 2024 in oil-importing (China, India, Germany, Italy, Japan, USA, and South Korea) and oil-exporting (Saudi Arabia, Russia, Iraq, Canada, and the United Arab Emirates) countries. The findings reveal that an increase in oil prices significantly impacts the returns of all countries. For oil-importing countries, an increase in oil prices consistently exhibits a positive impact, with insignificant effects in lower and medium quantiles and significant effects in higher quantiles. Conversely, a decrease in oil prices generally decreases stock market returns across all quantiles. This study offers valuable insights for investors to manage risks and improve the predictability of oil price fluctuations. It also provides strategies and policy implications for capitalists and decision-makers. By addressing contemporary issues and using up-to-date data, the study supports financial institutions and portfolio managers in formulating effective strategies. Full article

The development of an energy transition policy that ensures a rational combination of the requirements of sustainable development and the country’s priorities is a key factor determining the success of its development. The complexity and importance of this task increase in the case of countries in which oil and natural gas export revenues play a key role in the formation of the budget and development of the country. In this paper, the solution to this problem is studied using the example of Azerbaijan. Considering that the task requires addressing the uncertainty and limitations of available information and statistical data, we used an approach based on the use of fuzzy scenarios and expert information. Scenarios have been described using linguistic variables and the formalism of Z-numbers. Z-numbers allow us to simultaneously formalize uncertainty and reliability in the information. Solving the problem involves integrating approximate methods of Z-reasoning and multi-criteria decision-making. This approach considers economic, social, environmental, and technological criteria and allows for the generation, analysis, and evaluation of transition scenarios. The results obtained demonstrate the effectiveness of the proposed methodology for constructing energy transition scenarios for countries producing and exporting oil and gas. The solution suggests a moderate increase in natural gas and hydropower production, along with a significant rise in solar and wind energy production. The results highlight the effectiveness of a rational combination of traditional and renewable energy sources during the transition period. The rule base developed in this article can be adapted to account for the priorities and constraints of a specific oil- and gas-producing and -exporting country, and the fuzzy scenarios approach can be successfully applied to address the transition challenge. Full article

All nations are searching for ways to address their environmental gaps to assure long-term sustainability, given the alarming rate at which the environment is deteriorating. As one of the nations pursuing clean energy, Oman needs to embrace eco-friendly practices that can encourage sustainability and resource efficiency to establish green ecosystems. This study uses an autoregressive distributed lag (ARDL) model to examine the link between CO₂ emissions, GDP, energy consumption, financial development, foreign direct investment, urbanization, and population in the Sultanate of Oman between 1990 and 2023. The Middle Eastern nation of Oman was selected for the case study because it has traditionally depended on its domestic fossil fuel resources. Furthermore, the country has been a net exporter and surplus oil producer, underscoring Oman’s long-standing reliance on fossil fuels. The findings indicate that urbanization and GDP lower CO₂ emissions, whereas population growth, energy use, FDI, and financial development raise emissions. As per the EKC model, the GDP2 coefficient was 0.488 and β1 < 0. This suggests that there is a positive correlation between environmental degradation and economic growth in Oman, although the EKC only applies up to a particular income level. The findings suggest enacting additional environmental regulations to support sustainable business behavior, raising public understanding of environmental issues, using more clean energy technologies, lowering energy consumption, and reaching the goal of net-zero carbon emissions. Full article

Since private cars and vans accounted for more than 25% of global oil consumption and about 10% of energy-related CO₂ emissions in 2022, increasing the share of electric vehicle (EV) ownership is considered an important solution for reducing CO₂ emissions. At the same time, reducing emissions entails certain economic losses for those countries whose exports are largely covered by the oil trade. The explosive growth of the EV segment over the past 15 years has given rise to overly optimistic forecasts for global EV penetration by 2050. One of the major obstacles to such a development scenario is the limited availability of resources, especially critical materials. This paper proposes a mathematical model to predict the global EV fleet based on the limited availability of critical materials such as lithium, one of the key elements for battery production. The proposed model has three distinctive features. First, it shows that the classical logistic function, due to the specificity of its structure, cannot correctly describe market saturation in the case of using resources with limited serves. Second, even the use of a special multiplier that describes the market saturation process taking into account the depletion (finiteness) of the used resource does not obtain satisfactory economic results because of the “high speed” depletion of this resource. Third, the analytical solution of the final model indicates the point in time at which changes in saturation rate occur. The latter situation allows us to determine the tracking of market saturation, which is more similar to the process that is actually occurring. We believe that this model can also be validated to estimate the production of wind turbines that use rare earth elements such as neodymium and dysprosium (for the production of powerful and permanent magnets for wind turbines). These results also suggest the need for oil-exporting countries to technologically diversify their economies to minimize losses in the transition to a low-carbon economy. Full article

This paper offers a basic analysis for strategic decision-makers of the process when an economy shifts from oil to non-carbon energy exports and zero carbon emissions. The fundamental concept is how to offer environmental performance without causing an economic contraction. The costs and feasibility of solar, wind, and helium closed-cycle technologies are thoroughly and independently compared. Solar panels make up 0.67% of the USD 1.14 trillion total cost of solar energy, which is the capital investment, with panels accounting for 0.51%. Future technical developments are expected to bring down the cost of such solar farms to USD 0.74 trillion. Turbines comprise 66% of the estimated USD 0.67 trillion wind energy costs. At USD 0.36 trillion, helium closed-cycle gas turbines—which account for 0.78% of the overall cost—are essential for stabilising energy output. With a focus on cost viability, this analysis offers direction for Libya’s transition to energy self-sufficiency and export, in support of global carbon reduction targets. It also offers unique insights into areas not previously covered by other studies. This paper’s unique contribution is its economic analysis of the decarbonisation of an entire oil-exporting nation. Full article

In this paper, we use monthly data from 1992 to 2022 and a structural VAR model to investigate the effects of oil supply shocks, aggregate demand shocks, and oil-specific demand shocks in the global crude oil market on the Canadian stock market. Our analysis reveals that these shocks affect the S&P/TSX Composite Index and various sector-specific indices in different ways. Specifically, the response of the Canadian market to oil-specific demand shocks diverges notably from the U.S. market, highlighting Canada’s unique position as an oil-exporting country. In the long run, oil price shocks account for over 10% of the variation in the composite index and as much as 35% in the Energy sector index. Full article

Our investigation, bolstered by the robust gravity trade model and panel data econometric technique, underscores the pivotal factors that influence trade interactions between Saudi Arabia and the BRICS nations—Brazil, Russia, India, China, and South Africa. The study, spanning from 1998 to 2023, delves into key economic metrics such as the gross domestic product, exchange rate fluctuations, inflationary trends, political conditions, and trade deals. We employ a range of econometric strategies, including pooled Ordinary Least Squares (OLS) and fixed effects models, to reveal that the GDP of BRICS states consistently and significantly impacts trade volumes. Specifically, a 1% increase in the GDP of partner countries correlates with a 0.37% rise in trade volume within the pooled OLS model. This effect amplifies to 1.43% when adjusting for temporal and country-specific factors in the fixed effects, underscoring the importance of accommodating unobserved heterogeneity, which refers to the unmeasured factors that can influence the relationship between GDP and trade volume. The political stability of BRICS nations mitigates transactional risks and promotes more stable trade relationships, thereby enhancing trade flows. Fluctuations in exchange rates exert positive and significant effects. This indicates that a more robust Saudi Riyal, an essential policy instrument, can enhance trade by increasing the competitiveness of Saudi exports. This study demonstrates that economic magnitude, political stability, and exchange rates affect Saudi Arabia’s trade with BRICS nations. These results bolster the Kingdom’s Vision 2030 objectives for economic diversification. This research advocates for stable political climates and strategic trade agreements to enhance trade relations. This study asserts that this approach will guarantee sustainable growth and diminish the Kingdom’s reliance on oil exports, instilling optimism in the Saudi economy. Full article

The aim of this study is to quantitatively describe the anticipated change in the energy mix of the Sultanate of Oman (Oman) as the country moves forward in its national plan for green hydrogen, in order to become a global producer and exporter. This aim is achieved by curating recent data about energy projects in Oman that are either operating or planned (in a construction or pre-construction stage). Then, these data are processed further to extract useful insights about how the energy mix would change if the planned projects are realized and added to the operating ones. This reveals the serious commitment of the country to accomplish its national plan for green hydrogen (GH), where the green hydrogen production ambition for 2030 is about 1.125 million tons per annum (Mtpa), using a renewable energy capacity of approximately 18 GW. This ambition increases to about 3.5 Mtpa with approximately 70 GW of renewables in 2040, and increases further to about 8 Mtpa with approximately 180 GW of renewables in 2050. As a portrait of Oman’s energy mix with the assumption of successfully completing all planned energy projects, we found that the country is expected to have a total capacity of 83.1271 GW, with the share of renewables (solar and wind) reaching 83.133% (as compared to 15.0711 GW with an 8.907% renewables share for operating projects). Nearly all (precisely 99.571%) of the 68.0560 GW planned national energy capacity additions are based on solar or wind energy, while the traditional oil–gas energy is gradually phased out. Green hydrogen production dominates this surge in renewables penetration within the Omani energy mix, with 84.659% of the planned 34.3140 GW solar capacity additions linked with green hydrogen production, for operating water electrolyzers. Similarly, 98.804% of the planned 33.4500 GW wind capacity additions are linked with green hydrogen production. Full article

This paper explores the transmission of volatility from Brent oil price evolution to the stock returns of 7 MENA countries, encompassing three importers and four exporters, after excluding four initial countries using the ARCH test. Employing the GARCH-BEKK estimation method, we detect this transmission from January 2008 to September 2022. The results reveal significant volatility persistence across six stock markets with three importer countries and three exporters. These findings align with Shiller’s theory, indicating high volatility in financial markets. Tunisia’s stock market shows sensitivity to oil market developments, while the Omani market demonstrates volatility transfer from Brent oil prices. However, Morocco’s market exhibits resilience, with no significant transmission from international oil prices. Exporting countries, except the UAE, display significant and positive coefficients, indicating volatility transmission. The study suggests further research into underlying mechanisms and recommends policymakers and investors implement strategies to mitigate volatility effects. Advanced modeling and behavioral insights can enhance risk management strategies. Full article

This paper delves into the critical determinants of renewable energy consumption, focusing on the contrasting roles of oil imports and exports. It aims to bridge the knowledge gap by comparing these determinants across both oil-importing and oil-exporting nations, offering a comprehensive and nuanced perspective to inform policy recommendations. Using annual data from 1990 to 2018 sourced from the World Bank database, the study employs panel multiple regression analysis and adopts a fixed effects model to explore two main questions: What drives the use of renewable energy sources? How does a country’s oil importer or exporter status affect these factors? The findings reveal a significant but inverse relationship between oil rents and renewable energy consumption (REC) for both types of countries. Additionally, there is a notable negative correlation between GDP growth and REC for both oil-exporting and oil-importing countries. Interestingly, the crude oil average closing price and inflation show an insignificant impact on REC in both contexts. The study also highlights that net energy imports significantly affect REC, with a much stronger inverse relationship in oil-importing countries compared with oil-exporting ones. For oil-importing countries, diversifying energy sources is a crucial investment. Governments should prioritize research and development in renewable energy to spur technological advancements, enhancing efficiency and affordability. Economic growth-promoting policies, such as tax incentives and subsidies for renewable energy businesses, are vital for encouraging sustainable practices. Consistent, long-term policies are essential for providing investor confidence and supporting the transition to renewable energy. For oil-exporting countries, similar strategies are recommended. Additionally, allocating a portion of oil revenues to renewable energy infrastructure and funding research and development in renewable technologies through local universities and startups are crucial steps. This dual approach will not only enhance energy diversification but also foster innovation and sustainability in the energy sector. Full article

The oil and gas trade is one of the main ways to promote regional economic development by improving the effectiveness of resource allocation. While regional energy cooperation could lead to growth in the energy trade, blind investment will reduce effective yields. Kazakhstan and China maintain a stable oil and gas trade, but resource exports to China are not growing as expected. The aim of this research is to analyze the competitiveness and complementarity of Kazakhstan and China in the oil and gas trade, as well as the main factors affecting the oil and gas trade between Kazakhstan and China. By creating a linear regression equation to analyze the gravity model of the oil and gas trade between Kazakhstan and China, it was revealed that a 1% growth of the gross domestic product in both countries would lead to a 1.471% increase in the oil and gas trade. However, an increase in oil and gas production in Kazakhstan will not contribute to the expansion of the oil and gas trade with China. Kazakhstan and China could improve their oil and gas trade by strengthening financial cooperation, improving energy efficiency, increasing investment in infrastructure such as oil refineries and pipelines, and developing new oil and gas fields in Kazakhstan. Full article

The energy revolution in Saudi Arabia has accelerated significantly since 2016, driven by the National Vision 2030. Significant changes to energy subsidies took place, and the renewable energy sector has seen rapid growth. The paper presents an empirical analysis of the Saudi energy transition by emphasizing the drivers of fuel consumption in KSA. It primarily attempts to explore the long-run (LR) connection between oil consumption and several economic variables such as economic growth, crude oil prices, investment, and the labor force in Saudi Arabia (KSA) from 1991 up to 2021. The paper implemented the vector error correction model (VECM) and performed different diagnostic tests to provide more evidence about the validity and robustness of the tests. The empirical findings highlighted how important the labor force, savings, GDP, and crude oil price are in determining oil consumption for KSA. The law of demand is significantly present, which negatively affects oil consumption for KSA as an oil exporting country. The results also supported the existence of a long-term direct correlation between the variables and oil consumption. Furthermore, the short-term estimation highlighted that only saving has a negative impact on oil consumption for a single lagged period. Our findings provide governments and regulators with further incentive to slow the expansion in oil consumption, as a larger labor force is demanding more oil to attain the target, faster economic growth, and increased savings are all contributing factors. Our findings are significant because they can assist policymakers, investors, and regulators in generating more efficient oil substitutes and making them affordable for the economy. Full article

In the quest for achieving decarbonisation, it is essential for different sectors of the economy to collaborate and invest significantly. This study presents an innovative approach that merges technological insights with philosophical considerations at a national scale, with the intention of shaping the national policy and practice. The aim of this research is to assist in formulating decarbonisation strategies for intricate economies. Libya, a major oil exporter that can diversify its energy revenue sources, is used as the case study. However, the principles can be applied to develop decarbonisation strategies across the globe. The decarbonisation framework evaluated in this study encompasses wind-based renewable electricity, hydrogen, and gas turbine combined cycles. A comprehensive set of both official and unofficial national data was assembled, integrated, and analysed to conduct this study. The developed analytical model considers a variety of factors, including consumption in different sectors, geographical data, weather patterns, wind potential, and consumption trends, amongst others. When gaps and inconsistencies were encountered, reasonable assumptions and projections were used to bridge them. This model is seen as a valuable foundation for developing replacement scenarios that can realistically guide production and user engagement towards decarbonisation. The aim of this model is to maintain the advantages of the current energy consumption level, assuming a 2% growth rate, and to assess changes in energy consumption in a fully green economy. While some level of speculation is present in the results, important qualitative and quantitative insights emerge, with the key takeaway being the use of hydrogen and the anticipated considerable increase in electricity demand. Two scenarios were evaluated: achieving energy self-sufficiency and replacing current oil exports with hydrogen exports on an energy content basis. This study offers, for the first time, a quantitative perspective on the wind-based infrastructure needs resulting from the evaluation of the two scenarios. In the first scenario, energy requirements were based on replacing fossil fuels with renewable sources. In contrast, the second scenario included maintaining energy exports at levels like the past, substituting oil with hydrogen. The findings clearly demonstrate that this transition will demand great changes and substantial investments. The primary requirements identified are 20,529 or 34,199 km² of land for wind turbine installations (for self-sufficiency and exports), and 44 single-shaft 600 MW combined-cycle hydrogen-fired gas turbines. This foundational analysis represents the commencement of the research, investment, and political agenda regarding the journey to achieving decarbonisation for a country. Full article