An Asymmetrical Relationship Between Oil Price Fluctuations And Geopolitical Tensions Between China And The United States
Abstract
Oil remains a strategic asset at the heart of contemporary geopolitical rivalries. China’s rise to become the world’s largest importer and the United States’ transformation into a major producer and exporter have profoundly altered the energy balance of power, reinforcing the interdependence between oil markets and bilateral geopolitical tensions. This article examines the existence and nature of an asymmetric relationship between oil price fluctuations and geopolitical tensions between China and the United States, distinguishing the effects of price increases and decreases and their dependence on risk regimes. The analysis is based on monthly data covering 2000–2024 and employs a nonlinear econometric approach that combines an NARDL model for asymmetric cointegration, a Quantile VAR (QVAR) model to capture conditional effects by risk level, and an EGARCH model to analyze the asymmetric transmission of geopolitical uncertainty to oil volatility. The results show that rising oil prices significantly intensify Sino-American geopolitical tensions, while falling prices have a weaker and less persistent effect. This asymmetry is particularly pronounced during periods of high international instability. Furthermore, geopolitical tensions significantly increase oil price volatility, with a leverage effect indicating that negative geopolitical shocks have a disproportionate impact on energy markets. These results suggest that the asymmetry in the oil-geopolitical transmission reflects differentiated energy vulnerabilities and distinct strategic behaviors between China and the United States. The study underscores the importance of oil as a vector of asymmetric interdependence and as an amplifier of international tensions, with major implications for energy security policies, financial market stability, and global energy governance.
- Oil price increases significantly intensify Sino-American geopolitical tensions.
- Oil price decreases have weaker and less persistent geopolitical effects.
- The oil–geopolitics relationship is nonlinear and regime-dependent.
- Geopolitical tensions significantly amplify oil price volatility with a leverage effect.
- Asymmetry reflects structural energy dependence between China (importer) and the U.S. (producer/exporter).
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Copyright (c) 2026 Abdelkader Mohamed Sghaier Derbali
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