Measuring and analyzing the impact of oil price fluctuations on the balance of payments in Iraq for the period 2000-2022

Abstract

Oil is one of the strategic commodities, and is important in international trade, and is the main source of energy in the world as a whole, and oil revenues constitute the main income in oil-producing countries, including Iraq, whose exports depend mainly on this commodity, which is a one-sided economy, as its percentage is close to (98%) of its total exports, and as a result of the economic and political conditions that the Iraqi economic reality has gone through, as it is one of the developing countries that suffers from fluctuations in its balance of payments in line with the fluctuations in oil prices significantly, which made it hostage to speculation in the global oil market, and the study aims to know the repercussions of these fluctuations in oil prices on the balance The Iraqi balance of payments. The study highlighted that oil price fluctuations play a major role in oil-exporting countries, as any rise or fall in oil prices leads to changes in the components of the balance of payments and then to the economic structure of rentier countries. This is due to the great relative importance of oil exports. In this context, it comes to show and measure the impact of global oil prices on the Iraqi balance of payments during the period (2000-2022), but the descriptive analysis used data for the period (2004-2021) due to the lack of data for that period that was used in the standard aspect, where the (VAR) model was used. The study concluded that there is a significant relationship in the short and long term, that the shock in the balance of payments leads to an increase in the balance of payments by (11244.24) million dollars in the first period, while in the second period it leads to a decrease in the balance of payments by (3916.83-) million dollars. The shock in oil prices does not affect the balance of payments in the first period, but in the second period, it leads to a decrease in the balance of payments by (-42.97) million dollars. Thus, there are variations in the impact of fluctuations in oil prices and the balance of payments, but these effects gradually decrease over time or periods in the long run. For example, in the seventh period, the impact of fluctuations in oil prices decreases as the balance of payments increases by (0.21) million dollars, and (17.94) million dollars as a result of a shock of one standard deviation that may occur in the oil price and the balance of payments, respectively.