Author(s)

Gen Li, Sixing Huang, Yunyi Zhu, Xuesi Zhang

Corresponding Author

Gen Li

Abstract

In the context of petroleum financialization, oil price fluctuations significantly impact financial markets. Exploring their impact mechanism is crucial for mitigating adverse effects. By analysing influencing factors, this paper focuses on direct and indirect impact mechanisms. Research shows that rising oil prices increase money supply in importing countries, leading to inflation and decreased purchasing power. Short-term impacts include rising supply enterprise stock prices and falling demand enterprise prices, with importing country exchange rates decreasing. Long-term impacts include currency depreciation and overall stock price decline. Declining oil prices, combined with global economic downturns and shrinking consumer markets, affect currency, stock, and foreign exchange markets. The indirect impact mechanism highlights interactions between sub-markets. To prevent adverse effects on China's financial market, this paper proposes optimizing energy consumption, stabilizing oil prices, and formulating effective financial policies.

Keywords

Fluctuation of Oil Prices, Financial Markets, Impact Mechanism