Estimating the Value of the Lebanese Oil Resources Modeling and Forecasting Oil Price

Abstract

The aim of this paper is to estimate the value of the Lebanese oil resources. It presents an overview of the natural resources within the Lebanese territories and economic zone. Furthermore, it analyses the oil spot price characteristics and volatility. It studies the oil future market while exploring the relation between speculation and spot oil price in the short run. Findings prove that in the short run, changes in oil inventories do not Granger cause changes in oil price, neither does the change in future prices. However, outcomes show that in the short run, the change in gold price granger causes the oil spot price. Additionally, in the aim of forecasting accurate oil price, the paper builds a Dynamic OLS equilibrium. The model includes the oil demand, the oil supply, the oil inventories, the USD/SDR exchange rate, the Gold price, and the open interest contracts in futures market as speculation effect. Eventually, with an estimate of the volume of the resources and the price forecasts until 2025, the paper forecasts the value of the Lebanese resources.