Oil Prices and Stock Market Impact in Kazakhstan: Boosting Energy Security in the Transition Process

This study investigates the complex relationship between oil price fluctuations and stock market performance in Kazakhstan, a resource-dominant economy heavily dependent on oil exports. Using structural vector autoregression (VAR) analysis, we explore how both global oil supply and demand shocks influence Kazakhstan’s stock market. Our findings show that aggregate demand shocks significantly affect stock market volatility, while oil production shocks have a more limited effect on financial stability. Given Kazakhstan’s dependence on oil revenue, the country faces significant economic risks when oil prices fluctuate. These risks are further compounded by the ongoing global transition towards cleaner energy sources. This paper argues that to enhance energy security and ensure economic stability during this transition, Kazakhstan must diversify its energy sources, invest in renewable energy, and strengthen financial resilience. The development of green financial instruments and policies that promote energy transition will play a crucial role in safeguarding the country’s long-term financial and energy security. Our study contributes to the existing literature by linking oil price volatility with the need for enhanced energy security strategies during Kazakhstan’s energy transition.