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How does ENSO impact U.S. Oil Spot and Future Prices?

Author

Listed:
  • Marco Gallegati

    (Polytechnic University of Marche)

  • William Ginn

    (Labcorp, Coburg University of Applied Sciences)

  • Jamel Saadaoui

    (University Paris 8)

  • Solomos Solomou

    (University of Cambridge)

  • Kun Tian

    (University of Kent)

Abstract

This paper examines the impact of El Niño-Southern Oscillation (ENSO) shocks on U.S. oil futures and goods market prices from 1983:03 to 2024:10 via the Time-Varying Parameter Local Projections (TVP-LP) model. By allowing impulse responses to evolve over time, we capture dynamic shifts in the oil market’s sensitivity to El Niño and La Niña events across different time-horizons. Our findings reveal an asymmetric response, where El Niño shocks exhibit a negative effect on oil futures and goods market prices, while La Niña shocks—especially extreme ones—lead to persistent upward price pressures. The effect becomes more pronounced at horizons within 12 months, indicating delayed transmission mechanisms through supply chain disruptions and changes in global energy demand. Additionally, the response intensifies in extreme ENSO episodes, highlighting non-linearities in climate-driven oil price fluctuations.

Suggested Citation

  • Marco Gallegati & William Ginn & Jamel Saadaoui & Solomos Solomou & Kun Tian, 2025. "How does ENSO impact U.S. Oil Spot and Future Prices?," Working Papers 2025.20, International Network for Economic Research - INFER.
    • Handle: RePEc:inf:wpaper:2025.20
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    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • F - International Economics
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

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