Correlation of Oil Prices and Gross Domestic Product in Oil Producing Countries

Anthony Msafiri Nyangarika, Alexey Yurievich Mikhaylov, Bao-jun Tang

Abstract


This paper proposes the degree of interdependence between the prices of crude oil and Gross Domestic Product of leading of countries such as Saudi Arabia and as the main suppliers of crude oil to the world market. The paper examines the theoretical aspects of oil pricing and investigation between the oil prices and GDP of leading oil producing countries. The main focus was on the results of empirical studies, which showed the strong relationship between prices for crude oil and GDP. Mutual dependence between prices and GDP was observed in Russia and Saudi Arabia.The developing the alternative sources of energy the countries will make the possibility to reform their own economy and make them less vulnerable to fluctuations in oil prices.

Keywords: Oil price, GDP, GARCH model, Oil Impact, Forecasting

JEL Classification: C51, C58, F31, G12, G15


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