Do Oil Prices influence Non-Oil Sector Stocks in Saudi Arabia Research Paper - 1

Do Oil Prices influence Non-Oil Sector Stocks in Saudi Arabia - Research Paper ExampleOil is one of the most eventful economic resources in global economy today. Fluctuations and shocks in crude inunct prices have been studied extensively by many leading economists. Several economic theories blot to the impact of changes in anele price on other commodities as well as in the domain economies. The context of oil is even to a greater extent important in the Saudi Arabian economy as it is has one of the biggest reserves of oil (one-fifth of worlds total) and is the second largest producer (behind Russia) of oil in the world. Saudi Arabia has proven oil reserves of 264.52 billion barrels of oil and recently surpassed by Venezuela who claimed their oil reserves had risen to 269.5 billion barrels of oil. In terms of oil production, Saudi Arabia has a quota allocation of just over 30% of production among cheek of the Petroleum Exporting Countries (OPEC) countries. The Saudi Arabian oi l production in 2010 was 9.1 million barrels per day which accounted for 13% of worlds total oil production. Oil is the major driver of economic application in Saudi Arabia. Oil related activities accounted for 47% of the GDP in 2010, and petroleum products exports amounted to $193 billion and accounted for 84% (by value) of total exports in Saudi Arabia. Therefore, oil prices do a vital role in the Saudi Arabian economy. However, from the perspective of an investor or an enterprise in Saudi Arabian market, it is also important to inhabit whether oil prices have a major role to play in stock prices of non-oil sector companies too. ... Fluctuations and shocks in oil prices have been studied extensively by many leading economists. Several economic theories point to the impact of changes in oil price on other commodities as well as in the world economies. The context of oil is even more important in the Saudi Arabian economy as it is has one of the biggest reserves of oil (one-fifth of worlds total) and is the second largest producer (behind Russia) of oil in the world. Saudi Arabia has proven oil reserves of 264.52 billion barrels of oil (OPEC, 2011) and recently surpassed by Venezuela who claimed their oil reserves had risen to 269.5 billion barrels of oil. In terms of oil production, Saudi Arabia has a quota allocation of just over 30% of production among Organisation of the Petroleum Exporting Countries (OPEC) countries. The Saudi Arabian oil production in 2010 was 9.1 million barrels per day which accounted for 13% of worlds total oil production. Oil is the major driver of economic activity in Saudi Arabia. Oil related activities accounted for 47% of the GDP in 2010 (MoF, 2011), and petroleum products exports amounted to $193 billion and accounted for 84% (by value) of total exports in Saudi Arabia (OPEC, 2011). Therefore, oil prices play a vital role in the Saudi Arabian economy. However, from the perspective of an investor or an enterprise in Saudi Arab ian market, it is also important to know whether oil prices have a major role to play in stock prices of non-oil sector companies too. If at that place is a high positive correlation between oil prices and non-oil sector stocks, an investor can use these stocks to hedge on their investments in oil. The outcome of this study could therefrom be very useful for foreign investors and enterprises already present or planning to enter the Saudi