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Crude oil pricing and statecraft: Surprising lessons from us economic sanctions

journal contribution
posted on 04.08.2022, 10:13 authored by Ayman Omar, Brendan Lambe

This study investigates the effects of US sanctions on crude oil prices, and estimates the associated losses or gains accrued to US output due to economic coercion. Using a sample of US sanctions imposed between 1987 and 2016, we find that oil prices exhibit a significant abnormal adjustment in magnitude. We show that the nature of the change is decided by the target country's status either as a net importer or exporter of oil. Our findings further reveal that while the abnormal rise in oil prices, associated with sanctions on net exporters, inflict losses on US output, coercive measures on net importers give rise to economic gains due to significant decline in oil valuations. Such externalities do not appear to be considered when designing and deploying measures of economic coercion. (JEL Q41, Q43, Q48).

History

Author affiliation

School of Business, University of Leicester

Version

AM (Accepted Manuscript)

Published in

International Review of Financial Analysis

Publisher

Elsevier

issn

1057-5219

Acceptance date

15/07/2022

Copyright date

2022

Available date

19/01/2024

Language

en

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