Investigating the Impact and Interaction of the Developed Economies (OECD) and Emerging Economies (BRICS) on the Crude Oil Market

For many years, the highest consumption of crude oil had belonged to developed countries of the Organization for Economic Cooperation and Development and oil-rich countries. However, the global oil market has undergone major changes over the last two decades, one notable feature of which has been the surge in demand of emerging economies such as China and India and their increased share in the oil market. These changes have altered the structure of the oil market and factors that impact the supply and demand for crude oil. Given the reliance of the Iranian economy on oil revenues and the structure of the oil market, it is important for Iran to study the changing nature of the oil market.
In this paper we examine the interaction of the developed and emerging economies in the global crude oil market, using structural vector auto regression model for 1986 to 2016. Our results reveal that during this period, the impact of developed countries on the crude oil market has decreased while the impact of emerging economies has increased. Crude oil production is increasingly influenced by market-oriented forces. In addition, over the years, the impact of volatility of the crude oil market on the economics of developed and emerging economies has decreased.
JEL Classification: F02, C50, C32.