Oil price in GCC Essay Example | Topics and Well Written Essays - 750 words

Oil worth in GCC - Essay ExampleSince the 1970s tremendous oil price shocks till the latest times, the oil prices have exhibited major changes which have immensely contributed to the volatility and uncertainty of the energy sector. The oil prices in the timeframe between 2007 and 2008 rose by 40 dollars to reach the threshold of 100 dollars down from 60 dollars, which had already increased to 147 dollars by July. By August, the prices fell to 145 dollars and in four months pronounced at the end of December 2008, they were trading at 45 dollars. The cycle of rise and fall of oil prices was repeated in 2009 and the purport has progressed till 2014. This trend has been a serious concern as it affects both producers and consumers.In the last decade, there has been much literature devoted to the exploration of the relationship between mental strain markets and oil prices in the GCC countries. Research from empirical documents indicate that the fluctuations in the oil prices has an impa ct on the corporate performance of companies, earnings and output as wholesome as stock returns. Most of the studies conducted recently have indicated a link between stock prices and oil prices although such studies were based on market performances of positive economies. The assessment of the movement of GCC stock markets in response of the movements in oil prices can be examined both industry-level stock return data and country-level data (Bjornland, 2009).The findings taper that there is a direct relationship between stock prices and oil prices in the short term which is not present in the long term. The fortuity relationship exists, in most cases, running from oil prices to stock markets at the country level. At the industry level, the responses of the return on oil are relatively positive, as marked by only twelve out of twenty industries. The response of the oil price in relation to movements of the stock returns can be described as asymmetrical (Awartani & Maghyereh, 201 3). This