Factors driving oil price —— from the perspective of United States

This paper chooses monthly data covering the period from 1990:M1 to 2018:M12 to investigate the contributions of partisan conflicts (PCI), the dollar index (USDX) and U.S. oil production (PRO) on the oil price (OP) by applying the time-varying parameter-stochastic volatility-vector autoregression (T...

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Bibliographic Details
Published in:Energy (Oxford) 2020-04, Vol.197, p.117219, Article 117219
Main Authors: Su, Chi-Wei, Qin, Meng, Tao, Ran, Moldovan, Nicoleta-Claudia, Lobonţ, Oana-Ramona
Format: Article
Language:English
Subjects:
Dollar index
Economic crisis
Energy policy
Investment
Oil
Oil price
Partisan conflicts
Stochasticity
Time-varying
U.S. oil production
Volatility
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Summary:This paper chooses monthly data covering the period from 1990:M1 to 2018:M12 to investigate the contributions of partisan conflicts (PCI), the dollar index (USDX) and U.S. oil production (PRO) on the oil price (OP) by applying the time-varying parameter-stochastic volatility-vector autoregression (TVP-SV-VAR) model. The empirical results are consistent with the general equilibrium model, which states that the PCI has certain influences on the OP. However, the impact of the PCI is less than that of the USDX, and the negative effect of the USDX was strengthened after the global economic crisis. Moreover, the PRO is less important to the oil market than the PCI and USDX. In general, we can conclude that there are important roles that U.S. factors play in the oil market, especially those of partisan conflicts and the dollar value. Understanding the effects of U.S. factors on the oil market can provide revelations for countries, allowing them to formulate energy policies and stabilize the oil market. Additionally, an understanding of these factors can allow investors to adjust their investment decisions and diversify their assets. •U.S. political conflicts have both positive and negative influences on the oil price.•Negative effect of dollar on oil price is strengthened after global economic crisis.•The impact of dollar on oil price is greater than political conflicts.•U.S. oil production is the least important factor to drive the international oil price.•Empirical results are consistent with the general equilibrium model.
ISSN:0360-5442
1873-6785
DOI:10.1016/j.energy.2020.117219