Global Trade: Analyzing the Impact of GDP on Oil Prices and Markets

This presentation examines the influence of Gross Domestic Product (GDP) on oil prices within the global trade market, focusing on the distinct roles of Russia and Saudi Arabia as oil producers. It presents a hypothesis testing whether GDP influences the price of oil, using data from 2000 to 2018 and regression analysis. The findings suggest that GDP does impact oil prices, with Russia exhibiting a more free-market approach compared to Saudi Arabia, where prices are influenced by cartels. The presentation references existing literature to support its analysis and highlights the importance of emerging economies in the oil market.

ECONOMICS ASSIGNMENT
GLOBAL TRADE AND MARKET

Introduction
 Oil market determines the
powerhouse of world
economics.
 GDP increases the income
and hence demand for oil
increases.
 Russia and Saudi Arabia
are two different types of
oil producers.

Hypothesis
 The null hypothesis
of the research is
 Ho: GDP does not
influence the price of
oil set by different
countries
 The alternative
hypothesis is
 H1: GDP influence
the price of oil set by
different countries

Justifications
 Basher et al. (2018)
stated that, emerging
economies make the
difference in the oil
market.
 The improvement in the
standard of living
increases the oil demand.
 Razek et al. (2019) shows
that the vulnerability of
the oil price is high due
to its low elasticity.

Data analyses
 GDP has been used as a independent
variable
 Price of oil has been used as dependant
variable.
 Data collected for the year between 2000
and 2018.
 Regression has been used as a tool for
the data analysis.

Result
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.906102
R Square 0.821022
Adjusted R Square 0.810493
Standard Error 0.113466
Observations 19
ANOVA
df SS MS F Significance F
Regression 1 1.004006 1.004006 77.98353 9.27E-08
Residual 17 0.218868 0.012875
Total 18 1.222874
CoefficientsStandard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%Upper 95.0%
Intercept 0.208161 0.056914 3.657484 0.00195 0.088083 0.328238 0.088083 0.328238
GDP 3.55E-13 4.02E-14 8.830829 9.27E-08 2.7E-13 4.4E-13 2.7E-13 4.4E-13

Result
SUMMARY OUTPUT
Regression Statistics
Multiple R 0.498258
R Square 0.248261
Adjusted R Square0.204041
Standard Error0.039189
Observations 19
ANOVA
df SS MS F Significance F
Regression 1 0.008622 0.008622 5.614243 0.029916
Residual 17 0.026108 0.001536
Total 18 0.03473
CoefficientsStandard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%Upper 95.0%
Intercept 0.256335 0.022578 11.35355 2.34E-09 0.208701 0.303969 0.208701 0.303969
GDP -1E-13 4.22E-14 -2.36944 0.029916 -1.9E-13 -1.1E-14 -1.9E-13 -1.1E-14

Conclusion
 The influence
of GDP is
present in both
the cases.
 Russia is more
of a free
market in the
context of oil.
 Price of the
Saudi Arabian
oil is
determined by

Reference
 Balmaceda, M.M., 2016. Douglas Rogers, The depths
of Russia: oil, power, and culture after socialism.
 Basher, S.A., Haug, A.A. and Sadorsky, P., 2018. The
impact of oil-market shocks on stock returns in major
oil-exporting countries. Journal of International Money
and Finance, 86, pp.264-280.
 Nyangarika, A.M., 2018. Correlation of oil prices and
gross domestic product in oil producing countries.
 Razek, A., Noha, H., Michieka, N. and Delfino Silva, E.,
2019. OPEC+’s' Reasonable Oil Price Level'Notion and
the External Breakeven in Saudi Arabia, Russia and
Canada: Accounting for Economic Cycles and Pipeline
Politics.

Thank you