Abstract
We studied the relationship between the change in the price of oil and some of its determinants, using a structural equation model. The demand for oil is confirmed to be inelastic to the change in oil price during our sampling period. Economic activity is found to be the most significant factor in explaining the dynamics of oil price. Wars and political tension, among the largest oil producers and their neighbouring countries, can drive the crude oil price sharply higher, but no significant direct effect was confirmed by the SEM. The significant effects of wars and political tension on the price of oil lies in their ability to disrupt oil supplies.
| Original language | English |
|---|---|
| Pages (from-to) | 483-490 |
| Number of pages | 8 |
| Journal | Energy |
| Volume | 133 |
| DOIs | |
| Publication status | Published - 2017 |
Keywords
- Crude oil price
- Economic policy uncertainty
- Kilian economic index
- Structural equation modelling
- Wars
ASJC Scopus subject areas
- Civil and Structural Engineering
- Modelling and Simulation
- Renewable Energy, Sustainability and the Environment
- Building and Construction
- Fuel Technology
- Energy Engineering and Power Technology
- Pollution
- Mechanical Engineering
- General Energy
- Management, Monitoring, Policy and Law
- Industrial and Manufacturing Engineering
- Electrical and Electronic Engineering
