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The Impact of Economic Sanctions and War-Related Uncertainty on Oil Market Volatility: Evidence from the Russia-Ukraine War

Author

Listed:
  • Imlak Shaikh

    (Management Development Institute Gurgaon, Gurugram, Haryana, India)

  • Leena Ajit Kaushal

    (Management Development Institute Gurgaon, Gurugram, Haryana, India)

  • Priyanka Vallabh

    (Management Development Institute Gurgaon, Gurugram, Haryana, India)

Abstract

Economic sanctions engender the disturbance of financial transactions between the sanctioner and the targeted nations. The Russia-Ukraine war also restricted Russia's entry into financial and commodity markets, with reverberating effects on the global market. Hence, the study aims to elucidate the relationship between armed conflicts and economic sanctions enforced by the G7 nations, the crude oil market, and its corresponding volatility index, OVX. It seems that heightened levels of ambiguity, conflict, nervousness, and hostility have contributed to an increase in the fluctuation of the energy market, leading to an extreme response to economic sanctions. Our findings reveal that financial restrictions imposed by Australia, Japan, the UK, and the USA have led to higher uncertainty and increased volatility in the oil market. The news variable War exhibits higher volatility compared to Crude oil and Recession in the media press. The war-induced uncertainty has shown a significant impact on the oil volatility.

Suggested Citation

  • Imlak Shaikh & Leena Ajit Kaushal & Priyanka Vallabh, 2025. "The Impact of Economic Sanctions and War-Related Uncertainty on Oil Market Volatility: Evidence from the Russia-Ukraine War," American Business Review, Pompea College of Business, University of New Haven, vol. 28(2), pages 361-388, November.
    • Handle: RePEc:ris:ambsrv:021853
    DOI: 10.37625/abr.28.2.361-388
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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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