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The Determinants of Endogenous Oil Price: Considering the Influence from China

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  • Boqiang Lin
  • Jianglong Li

Abstract

China’s oil imports have increased significantly and will play a bigger role in the future. We incorporate the “China factor” into oil price. The main findings are (1) long-run trends of oil price are determined by oil supply and demand; emergencies would cause oil price volatility in the short run; (2) macroeconomic effects of oil price increases depend on the underlying factors that drive oil price; (3) China’s oil import, which can only explain 4.6 percent of oil price change, has a relatively small influence on oil price volatility; but (4) China affects the long-run trends of oil price by changing the fundamentals of the oil market, especially after financial crisis.

Suggested Citation

  • Boqiang Lin & Jianglong Li, 2015. "The Determinants of Endogenous Oil Price: Considering the Influence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(5), pages 1034-1050, September.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:5:p:1034-1050
    DOI: 10.1080/1540496X.2015.1041844
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    Citations

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    Cited by:

    1. Cross, Jamie & Nguyen, Bao H., 2017. "The relationship between global oil price shocks and China's output: A time-varying analysis," Energy Economics, Elsevier, vol. 62(C), pages 79-91.
    2. Jamie L. Cross & Chenghan Hou & Bao H. Nguyen, 2018. "On the China factor in international oil markets: A regime switching approach," Working Papers No 11/2018, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    3. Jamie Cross & Bao H. Nguyen & Bo Zhang, 2019. "New Kid on the Block? China vs the US in World Oil Markets," Working Papers No 02/2019, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    4. Brueckner, Marcus & Hong, Haidi & Vespignani, Joaquin, 2023. "Regulation of petrol and diesel prices and their effects on GDP growth: evidence from China," Working Papers 2023-02, University of Tasmania, Tasmanian School of Business and Economics.
    5. Krzysztof Drachal, 2022. "Forecasting the Crude Oil Spot Price with Bayesian Symbolic Regression," Energies, MDPI, vol. 16(1), pages 1-29, December.
    6. Hongxun Liu & Jianglong Li, 2018. "The US Shale Gas Revolution and Its Externality on Crude Oil Prices: A Counterfactual Analysis," Sustainability, MDPI, vol. 10(3), pages 1-17, March.
    7. Li, Jianglong & Xie, Chunping & Long, Houyin, 2019. "The roles of inter-fuel substitution and inter-market contagion in driving energy prices: Evidences from China’s coal market," Energy Economics, Elsevier, vol. 84(C).
    8. Wang, Fangzhi & Liao, Hua, 2022. "Unexpected economic growth and oil price shocks," Energy Economics, Elsevier, vol. 116(C).
    9. Markus Brueckner & Haidi Hong & Joaquin Vespignani, 2023. "Effects of Government Regulation of Diesel and Petrol Prices on GDP Growth: Evidence from China," ANU Working Papers in Economics and Econometrics 2023-690, Australian National University, College of Business and Economics, School of Economics.
    10. Lahiani, Amine & Miloudi, Anthony & Benkraiem, Ramzi & Shahbaz, Muhammad, 2017. "Another look on the relationships between oil prices and energy prices," Energy Policy, Elsevier, vol. 102(C), pages 318-331.
    11. Cross, Jamie L. & Hou, Chenghan & Nguyen, Bao H., 2021. "On the China factor in the world oil market: A regime switching approach11We thank Hilde Bjørnland, Tatsuyoshi Okimoto, Ippei Fujiwara, Knut Aastveit, Leif Anders Thorsrud, Francesco Ravazzolo, Renee ," Energy Economics, Elsevier, vol. 95(C).

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