Evaluating the Globalization-Regionalization Hypothesis in Crude Oil Pricing through Cointegration Tests

Author(s)	Ms. Manali Chandrakant Pawar
Country	India
Abstract	This paper investigates the competing globalization versus regionalization hypothesis within global crude oil markets from 1990 to 2021. Utilizing a cointegration framework, the study examines the long-run equilibrium relationships between the three global benchmarks: Brent, West Texas Intermediate (WTI), and Dubai. Unit root testing via the Phillips-Perron method confirms that all three series are non-stationary and integrated of the same order. Subsequent application of the Phillips-Ouliaris cointegration test reveals a statistically significant long-run relationship among the benchmarks. These findings suggest that despite short-term regional decoupling caused by logistical constraints or localized geopolitical shocks, a stable linear combination exists, rendering the global crude oil market a single, integrated great pool. The results have significant implications for international arbitrage strategies and energy policy.
Keywords	Regionalization, Cointegration, Crude Oil Benchmarks
Field	Sociology > Economics
Published In	Volume 8, Issue 3, May-June 2026
Published On	2026-05-22

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