Resources Policy 71 (2021) 101936 Available online 28 November 2020 0301-4207/© 2020 Elsevier Ltd. All rights reserved. Do crude oil price bubbles occur? ☆ Khalid Khan a , Chi-Wei Su b, * , Muhammad Umar b , Xiao-Guang Yue c a School of Finance, Qilu University of Technology, China b School of Economics, Qingdao University, China c European University Cyprus, Nicosia, 1516, Cyprus A R T I C L E INFO JEL classifcation: L61 B41 E30 Keywords: Crude oil price bubble Generalized supremum ADF Geopolitical events ABSTRACT The Generalized Supremum Augmented Dickey-Fuller (GSADF) test is employed to conclude whether crude oil price (OP) experiences multiple bubbles. The technique has distinctions to detect multiple bubbles along with its beginning and ending point. Oil is extremely signifcant due to its strategic position and several factors infuence OP. The outcomes display the existence of bubbles which imply that OP deviates three times. This indicates the beginning and termination of bubbles coincide with a particular crisis. The expansion of the world economy, the mismatch between demand-supply of oil, dollar depreciation, excess supply by Organization of the Petroleum Exporting Countries, shale oil production of the U.S., and low demand by the emerging economies are the leading factors of OP bubbles. The main contributions are the investigation of the OP bubble, its determinants and the different technique of GSADF to detect OP bubbles. Moreover, the greater economic certainty and political stability ensure a smooth supply of OP can lessen unexpected fuctuation. The symmetric information can minimize market speculation, improve market effciency, help investors make reasonable investment decisions, and minimize potential price risks. 1. Introduction Contemporary economic and fnancial literature contains several defnitions of asset price bubbles (Blanchard and Watson, 1982. How- ever, there is no consensus on a standard defnition that is acceptable to economic and fnancial organizations. When asset prices deviate from fundamental values and refer to periods of explosiveness, there is a bubble (Stiglitz, 1990). Some crises start with the burst of the bubbles in history such as the dot-com bubble in 2001, the house price bubble and the mortgage crisis in 2008. Similarly, sharp rises in asset prices and subsequent collapses are usually associated with bubbles (Brunnerme- ier, 2016; Su et al., 2017b). According to rational expectation theory, when investors expect the asset price to be sold higher than the expected future price, it will increase the current price of the asset (Stiglitz, 1990). Blanchard and Watson (1982) defne that bubbles occur when specula- tors buy fnancial assets higher than their expected basic value. Rational behavior theory assumes that market fundamentals are refected in asset prices. Moreover, price movements depend on market information about the expected future price of an asset, and deviations from base values are considered an indicative bubble. If the initial price of an asset suddenly rises and then falls sharply over a specifc period of time, then there is a price bubble (Lind, 2009). However, when investors believe that prices will not rise more and prices decline, the bubble ends and prices fall (Case and Shiller, 2003; Shiller, 2003). Therefore, the price bubble has an important impact on both the fnancial market and the real market, so it needs to be examined (Koseoglu, 2019). The purpose of this study is to investigate the existence of multiple bubbles in the oil price (OP) through Generalized Supremum Augmented Dickey-Fuller (GSADF) recommended by Phillips et al. (2013). Crude oil has a prominent position in commodity markets and is one of the leading energy-consuming fuels, as evidenced by its position in energy and fnancial markets (Su et al., 2019c; Khan et al., 2020). The international oil market has experienced several fuctuations over the past few decades due to geopolitical tensions in the Organization of the Petroleum Exporting Countries (OPEC) and the instability of the dollar, which have affected economic activity, government spending, monetary and fscal policy (Hamilton, 2003; Cunado et al., 2019; Khan et al., 2020). Since crude oil is a strategic commodity, the price mechanism has become the main concern and plays an undisputed role in economic output (Su et al., 2017a; Khan et al., 2020). Economic growth is ☆ This research is partly supported by the National Social Science Fund of China (20BJY021). * Corresponding author. 78, Kedazhi Rd., Qingdao, Shandong, China. Tel.: +8618661491158. E-mail address: cwsu7137@gmail.com (C.-W. Su). Contents lists available at ScienceDirect Resources Policy journal homepage: http://www.elsevier.com/locate/resourpol https://doi.org/10.1016/j.resourpol.2020.101936 Received 19 August 2020; Received in revised form 21 November 2020; Accepted 21 November 2020