Economic Dynamics of Oil Price Volatility and Energy Supply Disruptions Under Geopolitical Shockwaves: Evidence from Major Conflicts (1914–2022)

Abstract

This research paper aims to analyze the impact of wars and international conflicts on fluctuations in oil prices and global energy supplies, with a focus on the main channels through which this impact is transmitted, particularly disruptions in production and transportation, declines in oil supply, and concerns related to the security of supplies, in addition to changes in energy demand during periods of conflict. The study adopted the historical approach and the descriptive analytical approach, by tracing a number of historical cases that witnessed significant transformations in oil markets, including the October 1973 War, the Second Gulf War (1990–1991), the American war on Iraq (2003), and the Russian-Ukrainian war (2022)

The research results showed that wars and conflicts can lead to disruptions in oil and gas supplies, which is reflected in global markets in the form of noticeable increases and fluctuations in prices, especially when supply disruptions coincide with a high level of geopolitical instability, as the study also demonstrated that changes in energy demand during periods of conflict, whether as a result of military needs or the need to compensate for affected sources of supply, can increase the intensity of fluctuations in the markets. The research concluded that wars and international conflicts represent an important factor in shaping the dynamics of oil and energy markets, which highlights the importance of diversifying sources of supply and strengthening mechanisms of cooperation and stability to reduce the negative economic effects of oil shocks.