Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/73095 
Year of Publication: 
2012
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 32-2012
Publisher: 
Philipps-University Marburg, Faculty of Business Administration and Economics, Marburg
Abstract: 
There is an increasing tension between the Iranian Government and the west on an increasingly likely European oil embargo and the Iranian threat to close the Strait of Hormuz. The main question is: What will happen to the international oil prices in the case of shocks in the flow of Iranian oil to the international markets? In this study, we analyze the dynamic relationship between the Iranian oil supply and international oil prices from January 1973 - September 2011, using a modified version of the Granger causality test introduced by Toda and Yamamoto (1995). Our results show that there is no Granger causality between the Iranian oil production and international oil prices. Historical data on the Iranian oil production do not provide any useful information to explain the current and future values of international oil prices. Thus, global oil prices do not follow shocks in the Iranian oil production.
Subjects: 
Oil price
Oil production
VAR model
Granger causality
Sanction
Iran
JEL: 
E37
Q32
Q34
Q38
Q43
Document Type: 
Working Paper

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