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Shockwaves of Political Leadership: The Impact of Trump's Second Presidency on Global Oil Prices

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  • Sharaf, Mesbah Fathy

    (Department of Economics, Faculty of Arts, University of Alberta, Edmonton, Canada)

  • Shahen, Abdelhalem Mahmoud

    (Department of Economics, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia)

  • Mansour, El-Hussien Ibrahim

    (Department of Economics and Finance, Saint Peter's University, New Jersey, United States)

  • Abdelsamiea, Abdelsamiea Tahsin

    (Department of Economics, College of Business, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia)

Abstract

This study explores how Donald Trump's 2024 re-election affected Brent crude oil prices using an Interrupted Time Series (ITS) model. Given the importance of U.S. political shifts on global markets, the study tests for a structural break in oil prices following the election. Using daily data from January 2022 to March 2025, it controls for key macro-financial factors: the Economic Policy Uncertainty (EPU) Index, Dow Jones Industrial Average (DJIA), and the 10-year U.S. Treasury Yield. Findings show a significant 5.25% drop in Brent oil prices immediately after Trump's re-election, indicating initial market uncertainty. However, the trend reversed in the days after, suggesting that investor sentiment adjusted over time. A placebo test found no such effect before the election, strengthening causal claims. Additionally, a Distributed Lag ITS model revealed the decline unfolded gradually. These results echo past research linking political uncertainty to oil price volatility, highlighting the short-term sensitivity of oil markets to leadership shocks. Still, the later price recovery points to longer-term resilience. This research adds to the literature on political impacts on commodity markets, offering useful insights for investors, energy economists, and policymakers navigating politically driven market risks.

Suggested Citation

  • Sharaf, Mesbah Fathy & Shahen, Abdelhalem Mahmoud & Mansour, El-Hussien Ibrahim & Abdelsamiea, Abdelsamiea Tahsin, 2025. "Shockwaves of Political Leadership: The Impact of Trump's Second Presidency on Global Oil Prices," International Journal of Energy Economics and Policy, Econjournals, vol. 15(4), pages 651-660, June.
    • Handle: RePEc:eco:journ2:v:15:y:2025:i:4:id:19586
    DOI: 10.32479/ijeep.19586
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