PANDEMICS, CONFLICTS, AND ENERGY TRANSITIONS: INSIGHTS ON OIL AND STOCK MARKET

The price of oil, and consequently, stock market indices, have been affected in recent years by factors weighing on the global economy, from energy market developments to the transition to renewable energy sources and changes in global energy policy. This paper offers a comprehensive analysis, from January 2004 to 2024, of the evolution of stock market indices, oil market volatility, and investor reactions to recent black swan events that have shaken the global economy. In other words, our research explores the complex link between oil price fluctuations and stock market performance in the G20 economies over the past decade. The econometric and statistical modeling applied by the paper highlights a complex relationship between the stock indices studied and the volatility of oil prices in a univariate GARCH modeling environment (GARCH (1.1)), and a multivariate time series model DECO-GARCH, corroborating specialized studies in the field by suggesting that oil price fluctuations were faster at the beginning of the COVID-19 pandemic with decreasing fluctuations after war events (beyond which no substantial impact of the oil price on the stock market is observed). In addition, the Chow test identified, during the period studied, three important breaks coinciding with the beginning of the COVID-19 pandemic, the subsequent military conflict between Russia and Ukraine and the military confrontation between Israel and Gaza, which had strong repercussions on the economy. The results also indicate another very important point: the COVID-19 pandemic had a greater impact on the oil price and the stock market between January 2019 and November 2024 than military conflicts.