The determinants of oil price fluctuation in Malaysia / Muhammad Arham Japri

Following the hiking price of oil and gas products during these recent years, several numbers of studies have been conducted in order to explain the reason behind the increase and decrease in price of oil. On the other hand, the price of oil can be one ofthe determinants of economic growth. According to past research, the increase in oil price can give negative effects to the society. However, there are some arguments suggested that the incline in oil price can improve government's finance for project development thus stabilize the economic growth. This paper investigates the factors that might have contributed to the oil price increase in addition to demand of oil, exchange rate of USD, geopolitical, tax rate and OPEC's production cost. Moreover, the objective of this paper is to determine whether there are relationship between those variables are with the oil price movement in Malaysia. Basically, the data used in this research paper was collected from the secondary data which is the data gathered from past scholars and researchers for other objectives. The data mainly recovered by using Worldbank Databank, Malaysian Economic Statistic and Energy Commission Malaysia Energy Information Hub. This research uses data obtained from one country, Malaysia across 31 years of observation from the year 1985 to 2015. All of the data are analysed using E-views 8.0 and are tested according to 5 assumptions namely, the Durbin-Watson test, normality test, heteroskedasticity test, correlation test and specification test. As conclusion, the results obtained in this research project are demand of oil and tax rate have significant relationships with the price of oil, while exchange rate of USD and geopolitics have no significant relationship with the price of oil in Malaysia.