Crude Oil Pricing and the Statecraft: Lessons from Economic Sanctions

This study investigates the economic implications of the US’s foreign policy of coercive sanctioning as a means of exerting pressure on other states. When sanctions are imposed we find that oil prices exhibit a significant abnormal adjustment in magnitude. We show that the nature of the change is decided by the target country’s status either as a net importer or exporter of oil. We then investigate the costs or benefits flowing to the US as a result of sanctioning, such externalities do not appear to be considered when designing and deploying measures of economic coercion.