Weak Oil Prices and the Global Economy

Abstract

The results of this study indicate that changes in global output have significant impact on real oil price fluctuations. Sharp rises in oil prices in 2008 and recent slump in price of oil are evidence of a strong influence of demand one fluctuations of energy prices. The empirical results of the study are based on VAR impulse response functions and Granger Causality test using monthly data 1970 - 2016. Furthermore, the effects of political development in the Middle East on real oil prices are not supported in this study.