Oil shocks and trade networks: How Israel, South Korea, and Poland leveraged oil imports to access new regional markets

Studies on oil price shocks focus either on their macroeconomic consequences or on their effects on bilateral political relations between major oil suppliers and consumers. However, they overlook the effect of these shocks on second-degree political and economic relations created through oil trade on the margins of the market. This study examines how periods of price shocks in the global oil markets allow non-major oil importers to increase their degree of centrality within new trade networks. It argues that the importer's need for oil serves as a strategic entry point into previously inaccessible regional markets, turning its connections with new client-seeking oil producers into a central node from which it can access broader regional trade networks connected to that oil producer. This, in turn, facilitates the establishment of additional economic and political connections that persist after oil prices restabilize. The study argues that crude oil encourages such connections more directly than other traded commodities due to its geographical dispersion and critical role in national security considerations. To support these arguments, the study employs social network analysis and difference-in-differences methods to examine how Israel, South Korea, and Poland accessed new trade networks during global oil shocks in the 1970s, 1980s, and 2010s. For Israel and South Korea, Ecuador became a trusted supplier through which they could access new markets in Latin America. For Poland, oil trade with Nigeria allowed it to enter West African markets as it sought to diversify its oil imports following the Russian invasion of Crimea.