Journal of Energy Markets

Kostas Andriosopoulos
Alba Graduate Business School

This issue of The Journal of Energy Markets goes to press at a time of unprecedented structural transformation in the global energy landscape, shaped by accelerating climate and decarbonization commitments, growing technological capabilities across the entire energy spectrum, unfolding geopolitical risks, and ever more interconnected financial markets. A common thread – and one that is visible in this issue’s contributions – runs through this transformation: the future of energy markets will be shaped not only by technological progress and policy ambition but also by analytical discipline and a renewed sense of pragmatism. In navigating these shifts, the commitment to renewables is clear. Yet, pragmatism requires the presence of all resources, including hydrocarbons such as natural gas, with a realistic understanding of their continuing relevance during the energy transition. Each of the issue’s contributions offers a distinctive lens on how markets, policy frameworks, financial mechanisms and analytical tools are adapting to a more complex and interdependent energy ecosystem.

Our first paper, “Harnessing green finance for net-zero: strategies and innovations in the Middle East and North Africa region” by Usman Bashir and Muntazir Hussain, provides an analysis of the role of green and climate finance in enabling net-zero pathways in the Middle East and North Africa (MENA) region. The authors highlight both the structural challenges associated with the region’s longstanding fossil fuel orientation and the need for large-scale capital mobilization from the private and public sectors to achieve meaningful emissions reductions. Their analysis extends from policy designs to financing mechanisms and technological innovations, defining the region’s climate finance architecture, while underscoring fragmented regulations, high capital costs and capacity shortfalls. By assessing national climate plans and commitments, emerging financing mechanisms, and the involvement of multilateral, bilateral and national development banks and funds, this paper demonstrates that scaled-up climate finance flows and stronger institutional capabilities are essential for advancing decarbonization across the MENA region.

In the second paper in the issue, “Machine learning in oil market volatility forecasting: the role of feature selection and forecast horizon”, Ahmet Göncü, Tolga U. Kuzubas¸ and Burak Saltoğlu provide an analysis of how machine-learning methods can advance oil market volatility forecasting, especially in a high-dimensional environment. Drawing on a data set of 205 variables and implementing a structured, multi-stage framework, the authors demonstrate that the forecast horizon, the chosen variables and the selected method affect informational drivers of volatility: financial indicators dominate predictive performance at shorter horizons, while macroeconomic and sentiment variables emerge as leading predictors at longer horizons. This paper exemplifies how hybrid methodological designs combining feature prefiltering and principal component analysis as a nonlinear learning method can offer robust insights and reliable estimates for the oil market during periods of structural change.

In “Analyzing the impact of energy prices on US stock market volatility”, the issue’s third paper, Abbas Khan, Abdul Razzaq and Muhammad Abbas Khan investigate how the fluctuations in crude oil, natural gas and electricity prices impact US equity market performance, as represented by the Nasdaq-100 index. Using a wavelet-based quantile regression approach, their paper examines how energy price volatility affects stock returns across economic cycles, distinguishing between supply- and demand-driven energy price dynamics. Their findings indicate asymmetries in the impact of crude oil prices on equity returns. Although short-term effects are not statistically significant, oil price increases have a negative demand driven impact on stock returns over longer horizons, associated with higher production costs and reduced consumer purchasing power. Increased diversification of the energy mix, including natural gas and renewable energy sources, demonstrates supply-driven effects across all quantiles, and price dynamics partially mitigate the negative impact of rising crude oil prices on equity markets. By modeling nonlinear and horizon-dependent relationships, the authors provide an assessment of how different energy sources interact with financial markets, highlighting the stabilizing role of alternative energy prices in mitigating oil-related stock market volatility.