Co-movements of crude oil prices

Karci R., Dogan N., Berument M. H.

Spatial Economic Analysis, 2024 (SSCI) identifier

  • Publication Type: Article / Article
  • Publication Date: 2024
  • Doi Number: 10.1080/17421772.2024.2303312
  • Journal Name: Spatial Economic Analysis
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, ABI/INFORM, Business Source Elite, Business Source Premier, EconLit, INSPEC
  • Keywords: globalisation of oil market, oil prices, regionalised oil market, spatial panel data models
  • Ankara Haci Bayram Veli University Affiliated: No

Abstract

This paper investigates whether the world crude oil market is globalised in a ‘one great pool’ or is regionalised by examining the prices of 21 different types of crude oil from various regions worldwide. We employ monthly data from October 2011 to November 2020 to construct spatial panel data models. Using three weight matrices, we account for the physical properties affecting crude oil quality and geographical factors. The resulting empirical evidence reveals that although we cannot refute the globalisation hypothesis, there are distinct price mechanisms specific to each type of crude oil. The pricing of crude oil appears to be influenced by a combination of similar and dissimilar qualities, including American Petroleum Institute gravity (API) gravity, sulfur content and geographical location.