New Kid on the Block? China vs the US in World Oil Markets

12 Pages Posted: 15 May 2019

See all articles by Jamie Cross

Jamie Cross

Center of Applied Macroeconomics and Commodity Prices (CAMP), BI Norwegian Business School; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Bao Nguyen

School of Economics, University of Economics Ho Chi Minh City (UEH), Vietnam; Development Policy Centre, Crawford School of Public Policy, ANU; Centre for Applied Macroeconomic Analysis, ANU

Bo Zhang

School of Accounting, Economics and Finance ; Australian National University (ANU) - College of Business and Economics

Date Written: May 15, 2019

Abstract

China has recently overtaken the US to become the world largest importer of crude oil. In light of this fact, we formally compare contributions of demand shocks from China, the US and the rest of the world. We find that China’s influence on the real price of oil has increased over the past two decades and surpassed that of the US. Despite this result, oil prices are more sensitive to demand shocks from the US than China. Finally, we document that demand shocks from China alone were too small to have caused the mid 2003-2008 price surge. Instead, oil specific demand shocks are found to be the major determinant of the real oil price during this period.

Keywords: China, US, Oil markets

JEL Classification: C32, E32, Q4

Suggested Citation

Cross, Jamie and Nguyen, Bao and Zhang, Bo, New Kid on the Block? China vs the US in World Oil Markets (May 15, 2019). CAMA Working Paper No. 33/2019. Available at SSRN: https://ssrn.com/abstract=3388382 or http://dx.doi.org/10.2139/ssrn.3388382

Jamie Cross

Center of Applied Macroeconomics and Commodity Prices (CAMP), BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Bao Nguyen (Contact Author)

School of Economics, University of Economics Ho Chi Minh City (UEH), Vietnam; Development Policy Centre, Crawford School of Public Policy, ANU; Centre for Applied Macroeconomic Analysis, ANU ( email )

Bo Zhang

School of Accounting, Economics and Finance ( email )

Northfields Avenue
Wollongong, New South Wales 2522
Australia

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

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