21. Not all political relation shocks are alike: Assessing the impacts of US-China tensions on the oil market
- Author:
- Yifei Cai, Valérie Mignon, and Jamel Saadaoui
- Publication Date:
- 08-2022
- Content Type:
- Working Paper
- Institution:
- Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
- Abstract:
- This paper assesses the effects of US-China political tensions on the oil market. Relying on a quantitative measure of these relationships, we investigate how their dynamics impact oil demand, supply, and prices over various periods, starting from 1971 to 2019. To this end, we estimate a structural vector autoregressive model as well as local projections and show that political tensions between the two countries pull down oil demand and raise supply at medium- and long-run horizons. Overall, our findings show that conflicting relationships between these two major players in the oil market may have crucial impacts, such as the development of new strategic partnerships.
- Topic:
- Security, Oil, Conflict, Rivalry, and Energy Crisis
- Political Geography:
- China, Asia, North America, and United States of America