Crude signals: Asymmetric adjustments in energy markets to global oil price shocks

Ur Rehman, Mobeen; Nautiyal, Neeraj; Alessa, Noha; Kashif, Muhammad; Vinh Vo, Xuan

Abstract

The paper empirically investigates the asymmetries pass-through rate of international oil prices to energy markets in eight key developed economies. To examine this, we apply an asymmetric ARDL model to split the effects of positive and negative partial sum decomposition in WTI oil price on energy markets in the short- and long-run. Moreover, we use cumulative dynamic multipliers to contribute to the understanding of the time path and adjustment process of energy stock responses to oil price shocks. Our results show that Germany, Italy, and the US exhibit asymmetry, with oil price variations affect differently to energy markets in these countries. Alternatively, energy markets in Australia, Canada, France, Japan, and the UK exhibit long-run symmetry, indicating that whether oil prices rise or fall, the pass-through to energy prices follows a proportional pattern in the long run. However, dynamic multiplier captures short-term asymmetries in several cases (Australia, Canada, France and Japan and the UK) and highlights different speeds of convergence with some markets adjusting rapidly while others requiring longer periods to get back to the equilibrium position. In particular, our results indicate that oil price increases have a larger pass-through effect than decreases on a few energy markets, while for others, the effect remains symmetric.

Citation

Ur Rehman, M., Nautiyal, N., Alessa, N., Kashif, M., & Vinh Vo, X. (2025). Crude signals: Asymmetric adjustments in energy markets to global oil price shocks. Journal of Environmental Management, 391(September 2025), 1-17. https://doi.org/10.1016/j.jenvman.2025.126567

• Journal Article Type: Article
• Acceptance Date: Jul 9, 2025
• Online Publication Date: Jul 16, 2025
• Publication Date: 2025-09
• Deposit Date: Jul 29, 2025
• Journal: Journal of Environmental Management
• Print ISSN: 0301-4797
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 391
• Issue: September 2025
• Article Number: 126567
• Pages: 1-17
• DOI: https://doi.org/10.1016/j.jenvman.2025.126567
• Keywords: NARDL, Energy markets, Oil, Asymmetry
• Public URL: https://keele-repository.worktribe.com/output/1324717