Coronavirus and Oil Price Crash

13 Pages Posted: 18 Mar 2020

See all articles by Claudiu Albulescu

Claudiu Albulescu

Politehnica University of Timisoara

Date Written: March 12, 2020


Coronavirus (COVID-19) creates fear and uncertainty, hitting the global economy and amplifying the financial markets volatility. The oil price reaction to COVID-19 was gradually accommodated until March 09, 2020, when, 49 days after the release of the first coronavirus monitoring report by the World Health Organization (WHO), Saudi Arabia floods the market with oil. As a result, international prices drop with more than 20% in one single day. Against this background, the purpose of this paper is to investigate the impact of COVID-19 numbers on crude oil prices, while controlling for the impact of financial volatility and the United States (US) economic policy uncertainty. Our ARDL estimation shows that the COVID-19 daily reported cases of new infections have a marginal negative impact on the crude oil prices in the long run. Nevertheless, by amplifying the financial markets volatility, COVID-19 also has an indirect effect on the recent dynamics of crude oil prices.

Keywords: oil price; coronavirus; financial volatility; economic policy uncertainty; bound tests; COVID-19

JEL Classification: Q41, G15, G41

Suggested Citation

Albulescu, Claudiu, Coronavirus and Oil Price Crash (March 12, 2020). Available at SSRN: or

Claudiu Albulescu (Contact Author)

Politehnica University of Timisoara ( email )

P-ta Victoriei, no. 2
Timisoara, Timis 300006

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