Work

A bad apple: The spillover effects of geopolitical risks on traditional energy trade

Year: 2026

Type: article

Abstract: Geopolitical risks (GPRs) are reshaping global energy trade and influencing energy security in profound ways. This study examines how GPRs have impacted fossil fuel imports from 2000 to 2022. We find that rising GPRs not only reduce imports from high-risk nations but also lead to broader declines across other markets, revealing a spillover effect beyond simple market substitution. The effects vary significantly across energy types, with coal and oil imports being more sensitive to GPRs. Countries with abundant energy resources or political/military alliances are more resilient to GPR shocks. Additionally, nations with strong renewable energy potential are more likely to transition to renewables in response to GPRs, rather than relying on fossil fuel imports from other markets. This highlights the negative spillover effects of GPRs on global fossil fuel trade and offers new insights into their role in global energy dynamics.

Source: International Review of Economics & Finance

DOI: 10.1016/j.iref.2026.104909

Authors: Zhenkun Cai, Lili Wang, Enyu Zhao, Mingzhu Zhou

Institutions: Shandong University of Science and Technology, University of International Business and Economics, Renmin University of China, Shandong University of Finance and Economics

Language: English

Topic: Global Energy Security and Policy

Subfield: General Energy

Field: Energy

Domain: Physical Sciences

SDGs: Affordable and clean energy, Climate action, Peace, justice, and strong institutions

Open Access status: gold

Estimated APC paid: $1,930