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Coronavirus and oil price crash

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  • Claudiu Albulescu

    (CRIEF)

Abstract

Coronavirus (COVID-19) creates fear and uncertainty, hitting the global economy and amplifying the financial markets volatility. The oil price reaction to COVID-19 was gradually accommodated until March 09, 2020, when, 49 days after the release of the first coronavirus monitoring report by the World Health Organization (WHO), Saudi Arabia floods the market with oil. As a result, international prices drop with more than 20% in one single day. Against this background, the purpose of this paper is to investigate the impact of COVID-19 numbers on crude oil prices, while controlling for the impact of financial volatility and the United States (US) economic policy uncertainty. Our ARDL estimation shows that the COVID-19 daily reported cases of new infections have a marginal negative impact on the crude oil prices in the long run. Nevertheless, by amplifying the financial markets volatility, COVID-19 also has an indirect effect on the recent dynamics of crude oil prices.

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  • Claudiu Albulescu, 2020. "Coronavirus and oil price crash," Papers 2003.06184, arXiv.org, revised Mar 2020.
  • Handle: RePEc:arx:papers:2003.06184
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    Cited by:

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    2. Ibrahim Yousef & Esam Shehadeh, 2020. "The Impact of COVID-19 on Gold Price Volatility," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 353-364.
    3. Güngör, Bekir Oray & Ertuğrul, H. Murat & Soytaş, Uğur, 2021. "Impact of Covid-19 outbreak on Turkish gasoline consumption," Technological Forecasting and Social Change, Elsevier, vol. 166(C).
    4. Oleksandr SHNYRKOV & Oleksii CHUGAIEV, 2020. "Resilience Of The Eu Exports To Ukraine Under The Covid-19 Pandemic," EURINT, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7, pages 80-100.
    5. Samba Diop & Simplice A. Asongu, 2020. "The Covid-19 Pandemic and the New Poor in Africa: the Straw that Broke the Camel’s Back," Working Papers of the African Governance and Development Institute. 20/038, African Governance and Development Institute..
    6. Daniel v{S}tifani'c & Jelena Musulin & Adrijana Miov{c}evi'c & Sandi Baressi v{S}egota & Roman v{S}ubi'c & Zlatan Car, 2020. "Impact of COVID-19 on Forecasting Stock Prices: An Integration of Stationary Wavelet Transform and Bidirectional Long Short-Term Memory," Papers 2007.02673, arXiv.org.
    7. Katarzyna Czech & Michał Wielechowski, 2021. "Is the Alternative Energy Sector COVID-19 Resistant? Comparison with the Conventional Energy Sector: Markov-Switching Model Analysis of Stock Market Indices of Energy Companies," Energies, MDPI, Open Access Journal, vol. 14(4), pages 1-17, February.
    8. Benzid, Lamia & Bakari, Sayef, 2021. "Modeling the Asymmetric Relationship between the Covid-19 and the U.S Dollar Exchange Rate: an Empirical Analysis via the NARDL Approach," MPRA Paper 105566, University Library of Munich, Germany.
    9. Hillary C. Ezeaku & Simplice A. Asongu, 2020. "Covid-19 and Cacophony of coughing: Did International commodity Prices catch influenza?," Working Papers 20/040, European Xtramile Centre of African Studies (EXCAS).
    10. Folinas, Sotiris & Duquenne, Marie - Noelle & Metaxas, Theodore, 2020. "Opportunities in the Hospitality Industry in a masked, and rubber-gloved world," MPRA Paper 105584, University Library of Munich, Germany, revised 03 Jun 2020.
    11. Hillary C. Ezeaku & Simplice A. Asongu & Joseph Nnanna, 2020. "Volatility of International Commodity Prices in Times of Covid-19: Effects of Oil Supply and Global Demand Shocks," Working Papers of the African Governance and Development Institute. 20/101, African Governance and Development Institute..
    12. Cătălina Camelia Joldeș, 2020. "Impact of COVID-19 on the Romanian capital market: An assessment of BET index and shares BRD, SNP, TLV, FP & SNP," Journal of Financial Studies, Institute of Financial Studies, vol. 5(9), pages 101-123, November.
    13. Gurpreet Singh Sidhu & Jaskirat Singh Rai & Kanwarvir Singh Khaira & Sarabjit Kaur, 2020. "The Impact of Covid-19 Pandemic on Different Sectors of the Indian Economy: A Descriptive Study," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 113-120.
    14. Garafas, Georgios & Dimitriou, Dimitrios, 2020. "The Ides Of March. Did Italian Covid-19 Crisis Fuel Us Economic Policy Uncertainty?," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(4), pages 511-524.

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    More about this item

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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