Does oil connect differently with prominent assets during war? Analysis of intra-day data during the Russia-Ukraine saga

Adekoya, Oluwasegun B.; Oliyide, Johnson A.; Yaya, OlaOluwa S.; Al‐Faryan, Mamdouh Abdulaziz Saleh

doi:10.1016/j.resourpol.2022.102728

Cited by 195 publications

(78 citation statements)

References 15 publications

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“…Rigobon and Sack (2005) find that Iraq war risk adversely affect the US equity market therefore war risk factor is useful in estimating the variations in the stock prices in war time. Adekoya et al (2022) report the higher connectedness between oil and other financial markets during the Russia-Ukraine conflict then before it. Tosun and Eshraghi (2022) compare the impact of Russian-Ukraine conflict on the two types of companies, leaver companies and remaining companies.…”

Section: Introductionmentioning

confidence: 99%

The Reaction of G20+ Stock Markets to the Russia-Ukraine Conflict ‘Black-Swan’ Event: Evidence From Event Study Approach

2022

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Section: Introductionmentioning

confidence: 99%

The Reaction of G20+ Stock Markets to the Russia-Ukraine Conflict ‘Black-Swan’ Event: Evidence From Event Study Approach

2022

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“…The recent Russian-Ukraine war has significantly impacted the global economy, increasing the cost of resources. For example, the price of oil has increased abruptly, which has affected the cost of various industries compared to before the war [ 24 ]. Under such a situation, determining which country has the most significant impact on the economy of a given country is crucial for economic security.…”

Section: Discussionmentioning

confidence: 99%

Analysis of risk propagation using the world trade network

Kim

Yun

2022

J. Korean Phys. Soc.

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An economic system is an exemplar of a complex system in which all agents interact simultaneously. Interactions between countries have generally been studied using the flow of resources across diverse trade networks, in which the degree of dependence between two countries is typically measured based on the trade volume. However, indirect influences may not be immediately apparent. Herein, we compared a direct trade network to a trade network constructed using the personalized PageRank (PPR) encompassing indirect influences. By analyzing the correlation of the gross domestic product (GDP) between countries, we discovered that the PPR trade network has greater explanatory power on the propagation of economic events than direct trade by analyzing the GDP correlation between countries. To further validate our observations, an agent-based model of the spreading economic crisis was implemented for the Russia–Ukraine war of 2022. The model also demonstrates that the PPR explains the actual impact more effectively than the direct trade network. Our research highlights the significance of indirect and long-range relationships, which have often been overlooked.

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“…For instance, the oil crises in the 1970s, followed by global economic recession and rising interest rates, affected the energy security of the country resulting in an abrupt rising in commodity prices and economic downturns [44]. Recently, the Russia-Ukraine war caused a global supply shock, leading to a rise in oil prices in the world market [45]. Studies show that oil price shocks affect the Philippines' energy security as well as the depreciation of the currency, consumer price index, and inflation, and results in slower economic growth [46][47][48].…”

Section: Case Studymentioning

confidence: 99%

Will a Geopolitical Conflict Accelerate Energy Transition in Oil-Importing Countries? A Case Study of the Philippines from a Real Options Perspective

Agaton

2022

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Geopolitical conflicts, involving a major player in the world market, affect the prices of oil and commodities, particularly in oil-importing countries. Consequently, the unprecedented changes in oil prices impact investments in energy transition projects. This study aims to analyze the dynamics of investment decisions in energy transition under uncertainties in geopolitical risks. This research applies the Black-Scholes-based real options valuation to value the flexibility in postponing energy transition investments considering the repercussions of the Russia-Ukraine war. Applying the proposed model to the case of the Philippines, the valuation result with a net present value of USD 231 million for a 1 GW capacity shows that energy transition is a viable project when the cost savings from using fossil fuels to renewables are considered. On the other hand, real options valuation finds a higher flexibility value of USD 990 million, which implies a better decision to postpone the project. The uncertainty in geopolitical conflicts further increases this value causing a longer waiting period to implement the energy transition project. Sensitivity analysis shows that the results are robust to changes in the explanatory variables. Results provide policy implications on making an oil-importing country energy self-sufficient and robust from economic and geopolitical shocks.

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Does oil connect differently with prominent assets during war? Analysis of intra-day data during the Russia-Ukraine saga

Cited by 195 publications

References 15 publications

The Reaction of G20+ Stock Markets to the Russia-Ukraine Conflict ‘Black-Swan’ Event: Evidence From Event Study Approach

The Reaction of G20+ Stock Markets to the Russia-Ukraine Conflict ‘Black-Swan’ Event: Evidence From Event Study Approach

Analysis of risk propagation using the world trade network

Will a Geopolitical Conflict Accelerate Energy Transition in Oil-Importing Countries? A Case Study of the Philippines from a Real Options Perspective

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