The impact of Russian–Ukrainian conflict on international financial markets: a comparative analysis of oil-importing and oil-exporting countries

• Published in: Journal of Chinese economic and foreign trade studies Vol. 18; no. 2; pp. 136 - 154
• Main Authors: Salem, Rania Abdelfattah, Lila, Salma, Lewaaelhamd, Israa
• Format: Journal Article
• Language: English
• Published: Bingley Emerald Publishing Limited 30.06.2025; Emerald Group Publishing Limited
• Subjects: Comparative analysis; Comparative studies; Conflict; Consumer Price Index; Consumers; Coordination; COVID-19; Crude oil prices; Economic conditions; Economic crisis; Economic growth; Economic stabilization; Energy industry; Exports; Foreign exchange rates; Foreign policy; Generalizability; Geopolitics; Global economy; Imports; Industrialized nations; Interest rates; International finance; Investors; Limitations; Macroeconomics; Oil reserves; Pandemics; Panel data; Petroleum; Policy making; Portfolios; Prices; Random effects; Rates of return; Risk management; Securities markets; Stock exchanges; Supply & demand; Volatility; Saudi Arabia; Venezuela; United States > US; Qatar; China; Kuwait; Oman; Russia; Oil prices; International markets; Stock market; Panel data analysis; Russian–Ukraine conflict
• ISSN: 1754-4408; 1754-4416; 1754-4416
• DOI: 10.1108/JCEFTS-03-2024-0026

Purpose This paper aims to examine the effect of the Russian–Ukrainian conflict on international financial markets. The authors investigate the impact of oil price fluctuations on stock markets’ performance in oil-importing versus oil-exporting countries in the period 2017–2023, pre and during the Russian–Ukrainian conflict. Design/methodology/approach The paper applies Static Panel Data for the monthly periods from 1 January 2017–31 December 2019, reflecting the time pre-conflict and from 28 November 2021–25 September 2023, reflecting the time during the conflict. Findings Oil prices has a significant negative impact on stock market performance in both oil-importing and exporting countries. Further analysis shows that the Russian–Ukrainian conflict reveals significant negative impact for exporting countries before the conflict, whereas the negative impact is only significant during the conflict in the case of importing countries. Research limitations/implications The findings are subject to several limitations. Focusing solely on the Russia–Ukraine conflict limits the generalizability of the results. The study captures only short-term effects, potentially missing longer-term market dynamics. Data constraints and the use of fixed and random effects models may not fully account for complex, nonlinear relationships. Additionally, excluding factors like interest rates and trade dynamics narrows the analysis, and treating oil-exporting and importing countries as homogenous groups overlooks critical country-specific factors. These limitations highlight important avenues for future research to gain a more nuanced understanding of geopolitical impacts on financial markets. Practical implications The Russia–Ukraine conflict highlights the urgent need for oil-importing countries to diversify their energy sources to reduce supply risks and stabilize markets. Moreover, investors should refine their strategies by adopting a more detailed, asset-specific approach and dynamic portfolio management to mitigate risks. Including crude oil in diversified portfolios can hedge against market volatility, providing stability during geopolitical crises. Social implications Given the global nature of oil markets, enhanced international policy coordination is crucial. Policymakers must collaborate to swiftly address oil supply disruptions, particularly as major economies like the US play pivotal roles in transmitting oil shocks. Additionally, understanding the interaction between economic variables and market dynamics will further strengthen risk management and policy interventions, enhancing overall financial stability. Originality/value This research presents a seminal study examining the relationship between oil prices and the stock market amid the Russian–Ukrainian conflict. The authors analyse the effect of oil price fluctuations caused by the conflict on stock markets in oil importing versus oil exporting countries.