Do oil prices and oil production capacity influence decision making and uncertainty in the financial market? Evidence from Saudi Arabia

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The aim of this study is to investigate the relationship between oil prices and oil production capacity and financial market performance in the Kingdom of Saudi Arabia and how oil prices and oil production capacity influence the decision making and uncertainty factors in Saudi Arabia’s financial markets. The key variables considered are oil prices and oil production capacity in the Kingdom of Saudi Arabia. Other variables such as foreign direct investment decisions and domestic investment decisions are adopted to explore their impact and reaction to the various risks identified. Therefore, data was collected from online sources to analyze qualitative and quantitative information to understand risks, uncertainties and decision-making considerations. The findings of this paper indicate that rising oil prices increase the value of the Saudi Arabian financial market.
The study showed that the diversification of the investor portfolio increases the stability of Saudi Arabia’s financial market. Also, the KSA’s financial market volatility primarily reflects oil price fluctuations, and the Saudi Arabian oil production capacity directly affects its financial market performance. Saudi Arabia’s oil production was also found to pose insignificant risk to long-term economic growth and stability, thereby putting investors’ long-term investments at risk. The study also showed that investors in Saudi Arabia’s financial market fail to objectively analyze risks by focusing on short-term high-profit margins from oil prices.

Acknowledgment
All authors have contributed equally to this paper.

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    • Figure 1. Saudi Arabia’s crude oil price and financial market performance correlation
    • Figure 2. Comparison of Saudi Arabian crude oil prices and financial market performance to reduce price impact
    • Formal Analysis
      Ayman Abdalmajeed Alsmadi, Loai Naser Alhwamdeh
    • Methodology
      Ayman Abdalmajeed Alsmadi, Amer Moh’d Al_hazimeh
    • Project administration
      Ayman Abdalmajeed Alsmadi
    • Supervision
      Ayman Abdalmajeed Alsmadi, Anwar Al-Gasaymeh
    • Writing – original draft
      Ayman Abdalmajeed Alsmadi, Anwar Al-Gasaymeh
    • Software
      Najed Alrawashdeh
    • Validation
      Najed Alrawashdeh, Amer Moh’d Al_hazimeh
    • Visualization
      Najed Alrawashdeh, Anwar Al-Gasaymeh
    • Writing – review & editing
      Najed Alrawashdeh, Loai Naser Alhwamdeh
    • Resources
      Anwar Al-Gasaymeh, Loai Naser Alhwamdeh
    • Funding acquisition
      Loai Naser Alhwamdeh
    • Investigation
      Loai Naser Alhwamdeh
    • Conceptualization
      Amer Moh’d Al_hazimeh
    • Data curation
      Amer Moh’d Al_hazimeh