The Impact of COVID-19 and War in Ukraine on Energy Prices of Oil and Natural Gas

The oil and gas sector remains pivotal in supplying energy globally. The COVID-19 pandemic and the Russia–Ukraine crisis intertwined the energy supply and demand, incurred the volatility of energy prices and disrupted the world economic order with profound effects on global political and economic paths in the long run. To investigate the impact of global COVID-19 on the energy prices of oil and natural gas for the period 2020–2022, a type of vector autoregressive (VAR) model, the vector error correction (VEC) model and the ordinary least squared (OLS) method were used for empirical analysis, producing the following main results. (i) COVID-19 significantly Granger caused both oil prices and natural gas prices to fluctuate at the 5% level. (ii) Oil prices significantly Granger caused natural gas prices to fluctuate at the 1% level because of the relations of substitutes for each other. (iii) OLS estimation validated that the cumulative number of COVID-19 confirmed cases was positively correlated with both oil prices and natural gas prices. However, the effect diminished in the long term as the pandemic was eventually brought under effective control. Exploring the effects of global issues including the pandemic and the war in Ukraine on the energy market is crucial to understanding the relationship between the supply shock and the energy sector green transitions and the global economy recovery.