Time-Varying Influences of Oil-Producing Countries on Global Oil Price

Abstract

This paper aims to investigate the time-varying influences of major crude oil-producing countries on Brent oil prices, with seven-panel data over the observation years of 1998 to 2018. We create seven panels with 36 monthly data for each and estimate the contributions of individual producing countries to oil price changes with a multivariate regression technique of ordinary least squares. Most existing researches have focused on identifying relationships among oil price, market fundamental factors, macroeconomic variables, and geopolitical events in broad perspectives. However, this paper undertakes a longitude/panel analysis of nine oil producers’ influences, with the Organisation for Economic Co-operation and Development (OECD) consumption and the U.S. Dollar Index (USDX) on oil prices in each panel and intends to identify which producers have statistically significant influencing weights on oil prices. We believe that this research contributes to the body of knowledge in better understanding the relative impacts of major oil-producing countries. Results show empirical evidences that the Organization of the Petroleum Exporting Countries (OPEC) production stayed as the greatest negative influence on the oil price in the periods of Panel 2 (2001−2003) and Panel 7 (2016−2018) only, while the U.S. Dollar Index took over the OPEC’s influencing role in most of the other periods, followed by Iran, the U.S., and China.

Keywords

• oil producers
• oil price
• time-varying influence
• oil market fundamentals
• oil price fluctuation