The Impact of COVID-19 on Oil Markets

Abstract

The study studies the possible impact of COVID-19 that impacted oil prices' instability (taken WTI, OPEC and BRENT prices) into consideration. The study ascertains the effects of the COVID-19 on a human multidimensional effect associated with new cases (NC) and recent deaths (ND) due to COVID-19. The study provides statistical data on the global reactionary impacts of oil prices pertaining to NC and ND. The paper renders accurate statistical information by considering other variables outside the NC and ND, including oil markets that comprises the West Texas Intermediate (WTI), OPEC and BRENT crude prices, Economic Policy Uncertainty Index (EPU), and VIX. Our study shows that the continuous COVID-19 cases globally had negative consequences, not only on the WTI but also the BRENT and OPEC crude oil prices. According to the ARDL estimation, in the long-run, Brent and WTI confirmed more significant negative impacts in response to the outbreak represented by ND than the OPEC basket. This means that during the COVID-19 spread, oil prices respond negatively and remarkably to the increase in the percentage of confirmed deaths while do not react significantly to the number of confirmed cases.