An Investigation of the Impact of Oil Price Changes on the Gulf Council Countries (GCC) Stock Markets - Dissertation Example

According to the report any fluctuation in oil prices does not go unnoticed. However an increase or decrease in oil prices does not have a uniform effect worldwide. Some countries gain and some suffer the consequences. This paper seeks to identify and analyse the relationship of oil prices to the stock markets of the GCC, which stands for Gulf cooperation council.From this paper it is clear that the most general assumption is that the changes in the oil prices have an indirect impact on the stock market.

This theory is applicable as it is believed by most economists, commentators and journalists. This relationship between oil prices and the stock market can be easily justified by the most famous headline of the Wall Street Journal that says “Oil Spikes Pummels Stock Market”. Also, the Financial Times also captured the attention of the investors regarding oil prices impact on the stock market by displaying headline which says “U.S. Stocks Rally as Oil Prices Fall”. According to the research, the relationship between of oil prices and the stock market is quite unpredictable and is very strange than it is assumed by most investors.

No one makes this negative relationship as a thumb of rule but most of the time these both variables move in opposite directions. This means that as the oil prices goes up it shows a negative impact on the stock market. On the other hand, as the price of the oil goes down it results in a positive impact on the stock market.. It is needed for ?guaranteeing the economy’s as well as modern industries development. The fluctuation in prices ?of oil is considered to be an indicator of the global or worldwide economy.

Each change in oil ?price is discussed as a hot topic both generally as well as in economic and the political circles of ?every country. There are various factors that may affect the oil prices and cause them to ?fluctuate. Major of these are the balance shifts in demand and supply of oil market, exchange rate ?fluctuation of dollar, Opportunistic Practices and instability of geopolitical factors/. These factors jointly work for bringing change in the oil prices and this change tends to have an impact upon the stock exchange performances of different countries as well.

The dissertation aims to investigate the impact of oil price fluctuation upon the stock market index of the GCC countries over the last five years. The dissertation examines and analyses the data for last five years using the linear regression model and it has been unveiled from the calculation of the data using the model that the GCC countries’ stock exchanges have always responded strongly towards the changes in oil fluctuation and the oil prices changes occurred during the last five years have also altered the stock exchanges indexes of the GCC countries.

Table of Content Acknowledgements Declaration 1. Chapter one: Introduction …………………………………………………….……..…….8 1.1. Aim and Objectives of the study …………………………………………..…….14 1.2. Methodology and data………………….………………….………………..…….15 1.3. The structure of the