Stability Analysis of the World Energy Trade Structure by Multiscale Embedding

Abstract

This study investigates the dynamic trading network structure of the international crude oil and gas market from year 2012 to 2017. We employed the dynamical similarity analysis at different time scales by inducing a multiscale embedding for dimensionality reduction. This analysis quantifies the effect of a global event on the dependencies and correlation stability at both the country and world level, which covers the top 53 countries. The response of China’s trading structure toward events after the unexpected 2014 price drop is compared with other major traders. China, as the world’s largest importing country, lacks strong stability under global events and could be greatly affected by a supply shortage, especially in the gas market. The trend of multi-polarization on the market share gives a chance for China to construct closer relationships with more stable exporters and join in the trade loop of major countries to improve its position in the energy trading networks. The hidden features of trade correlation may provide a deeper understanding of the robustness of relationship and risk resistance.