Highlights

• A 2026 Energy Policy study finds China's rare earth export volumes respond differently to oil price uncertainty depending on global conditions:
  • Contracting during COVID-era disruptions
  • Expanding during geopolitical conflicts like Russia–Ukraine
• Using bootstrap rolling-window Granger causality on 2012–2024 data, researchers show the relationship is time-varying and bidirectional, meaning rare earth export changes can also predict oil market volatility.
• For supply chain managers, the findings underscore that energy volatility and geopolitical shocks create regime-specific rare earth export risks, especially critical given China's ~90% processing monopoly in separation and magnets.

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A January 2026 paper (opens in a new tab) in Energy Policy by Zhengzheng Li and Shenyu Liu, with Oana-Ramona Lobonț, asks a timely question: when oil markets become unpredictable, does China’s rare earth export behavior act like an accelerator—or a brake? Using monthly data (2012–July 2024), the authors report a time-varying relationship: oil price uncertainty sometimes coincides with higher Chinese rare earth export volumes, and sometimes with lower volumes—depending on the global regime (pandemic vs. conflict-driven shocks).

The authors are affiliated with the School of Economics, Qingdao University, Qingdao, China, City University of Macau, Macau, as well as West University of Timisoara, Timisoara, Romania.

Study Method

The team uses a bootstrap rolling-window Granger causality framework. Translation: they repeatedly test whether past movements in an “oil uncertainty” index help predict changes in China’s rare earth export amount (and vice versa), while allowing the relationship to change over time instead of assuming one fixed link for the whole decade. IDEAS/RePEc+1 (opens in a new tab)

Their “oil price uncertainty (OPU)” measure is drawn from a well-known news-text-based approach (built from article counts across major newspapers).

Key Findings: Two Worlds, Two Directions

1) Pandemic era = uncertainty chills exports.

The paper finds a negative relationship during a COVID-era window (mid-2020): oil uncertainty rose while rare earth exports weakened—consistent with investment pullbacks and disrupted industrial activity.

2) Conflict era = uncertainty elevates “strategic materials.”

From mid-2022 into mid-2024, the study reports a positive relationship, arguing that geopolitical shocks (e.g., Russia–Ukraine; Israel–Hamas) raised both oil uncertainty and the perceived strategic value of rare earths—supporting higher export volumes in parts of that period.

3) Feedback loop—rare earth exports can predict oil uncertainty, too.

The authors also report windows where changes in export volumes appear to “Granger-cause” shifts in oil uncertainty, except during certain U.S.–China tension periods.

Why REEx Readers Should Care: The Processing Monopolist Still Has a Volume Lever

This study matters because China is not just a miner—it is the system’s processing choke point, often estimated at approximately 90% of separation/processing and similarly dominant in magnets.

If exports move with oil uncertainty in regime-specific ways, then “energy volatility” becomes another variable that can amplify downstream pricing risk—especially for EVs, wind, robotics, and defense supply chains.

Limitations and the Controversy Zone

• Granger causality is not true causation. It shows predictive timing, not proof that oil uncertainty causes export decisions (policy, quotas, enforcement, inventories, and industrial demand can drive both).
• Exports are measured as “amount,” not product mix. Volume can rise while value or criticality falls (light vs. heavy REEs; oxides vs. magnets).
• Narrative attribution is partly interpretive. Linking specific conflicts to specific export behaviors can drift into post-hoc storytelling unless independently validated against policy documents and customs microdata.

Bottom Line

The paper’s core contribution is not a single headline result—it’s the warning that rare earth export behavior is regime-dependent, and oil-market turbulence may coincide with meaningful shifts in China’s export “dial.” For investors, that is one more reason to model rare earth risk as a geopolitical-energy-finance bundle, not a standalone commodity chart.

Citation: Li, Z., Liu, S., & Lobonț, O-R. (2026). Oil price uncertainty and China’s rare earth exports: Driver or constraint? Energy Policy, 208, 114890. DOI: 10.1016/j.enpol.2025.114890.

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