Analysis of the Factors Influencing Oil Price Volatility Under Multiple Pressure Shocks

A closer look into the global determinants of oil price volatility could help improve our understanding in connection with changes in the level of uncertainty in the market for oil, thus, we investigate the determinants of global oil price volatility considering the oil-market specific fundamental factors including supply and demand factors, financial factors, economic policy uncertainty and geopolitical events by employing binary correlation test and complex networks. The results show that there are differences in the important connection points of the oil price network  the pre- and post-COVID-19 periods. The oil price determinants before the COVID-19 pandemic are oil supply, refinery utilization rate, and China’s economic policy uncertainty. In contrast, the determinants of oil prices in post-COVID-19 pandemic era are the amount of US oil consumption demand and US oil inventories. Moreover, the ranking analysis of important influences of oil price volatility shows that there are also differences in the impact of oil prices in the two periods. The ranking of the impact dimensions before the COVID-19 pandemic is: supply factors > financial factors > demand factors > geopolitical factors > economic policy uncertainty. The ranking of the impact dimensions in post-COVID-19 pandemic era is financial factors > demand factors > geopolitical factors > supply factors > economic policy uncertainty. Among them, the influence of the financial aspect in pre-COVID-19 pandemic era is greater than that of supply factors. The analysis of the transmission path of oil price fluctuation shows that in the period in pre-COVID-19 pandemic era, supply factors and financial factors were both important sources of risk export and major recipients of risk contagion, with risks spreading along "demand factors → financial factors«supply factors"; while in the period post-COVID-19 pandemic, the transmission path can be summarized as "financial factors → demand factors/geopolitical risk factors → supply factors", and the spillover effects of economic policy uncertainty and geopolitical risks are significantly enhanced in this period. Our findings are closely linked to the implications regarding the financialization of the oil market.