Munich Personal RePEc Archive

Does the Iranian oil supply matter for the oil prices?

Farzanegan, Mohammad Reza (2012): Does the Iranian oil supply matter for the oil prices?

[img]
Preview
PDF
MPRA_paper_36030.pdf

Download (172kB) | Preview

Abstract

There is an increasing tension between the Iranian Government and the west on an increasingly likely European oil embargo and the Iranian threat to close the Strait of Hormuz. The main question is: What will happen to the international oil prices in the case of shocks in the flow of Iranian oil to the international markets? In this study, we analyze the dynamic relationship between the Iranian oil supply and international oil prices from January 1973 - September 2011, using a modified version of the Granger causality test introduced by Toda and Yamamoto (1995). Our results show that there is no Granger causality between the Iranian oil production and international oil prices. Historical data on the Iranian oil production do not provide any useful information to explain the current and future values of international oil prices. Thus, global oil prices do not follow shocks in the Iranian oil production.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.