The impact of Terrorist attacks in selected countries on OPEC Basket Price Using Panel Data Model
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Abstract
This study aims to explore the relationship between terrorist attacks and OPEC Basket prices in the selected countries (Afghanistan, Iraq, and Nigeria). To achieve its objectives, an analytical approach was employed to examine how terrorist attacks correlate with OPEC Basket prices fluctuations in these countries from 2000 to 2020. Economic methods such as co-integration, the Pooled Regression, Random Effects, and Fixed Effects Models were applied.
The study revealed a positive relationship between terrorist attacks and the rise in OPEC Basket prices during the period from 2000 to 2020, where the increase in terrorist attacks in Iraq, Nigeria, and Afghanistan contributed to the rise in OPEC Basket prices in global markets. These countries are major oil producers or are located near vital oil pipelines, causing any instability or conflict in these regions to affect the increase in OPEC basket prices directly. Additionally, the study found a positive correlation between OPEC Basket prices and crude oil production, while a negative relationship was observed between global oil consumption and OPEC Basket prices. These findings align with the complex and interconnected set of factors related to geopolitical and supply-demand dynamics.
To mitigate the negative impact of terrorist attacks on OPEC basket prices, Afghanistan, Iraq, and Nigeria must prioritize strengthening security around oil infrastructure. This involves implementing advanced surveillance systems, robust cybersecurity measures, and deploying dedicated security forces.
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