This article investigates the impact of financial factors, specifically the liquidity of BRIC (Brazil, Russia, India, and China) and G4 (Eurozone, Japan, UK, and US) economies, on oil prices. Using single-state and Markov-switching VAR models on monthly data from 1999-2020, the study finds that positive shocks to BRIC liquidity significantly increase real oil prices. Unexpected G4 liquidity increases are also positively linked to real oil prices, particularly during crisis periods (like the subprime crisis and COVID-19 pandemic). The impact of BRIC liquidity on oil prices is greater than that of G4 liquidity, especially during crises.

Zhiping Zhou, Xuan Zhang