Economics

Does the oil price endanger the global economy?

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Does the oil price endanger the global economy? Contrary to many forecasts, the year 2018 starts with an oil price of around 68 US dollars per barrel. If some already think that the world economy could get into trouble, others stick to their forecasts.

With a price increase of around two percent since December, oil got off to a rapid start in 2018. Compared to the current $ 68 per barrel of Brent oil, the $ 44 per barrel last June looked modest. However, at the beginning of 2014, Brent still cost 111 US dollars per barrel – so the range of oil prices is enormous.

Does the oil price endanger the global economy?

Falling oil prices forecast: are the experts wrong?

According to a survey of 25 banks, insurers and fund companies, the analysts assume an average oil price of 59 US dollars for 2018. However, this would require a major correction – and some of the experts are sticking to it. The reasons for the current price development would therefore be to be found in the interruptions in production in the North Sea and in Libya and the unrest in Iran, which have so far not caused any failures, as well as in the increased demand in the USA due to the cold.

So far, the markets have not been impressed by geopolitical risks; in contrast, production downtimes have definitely influenced the price. However, this is offset by successively growing oil production in the USA, which benefits in particular from the higher prices: The maintenance and optimization work carried out is making profits bubble up.

The expectations of the analysts diverge widely, also taking into account the situation in Iran: The lowest values ​​are 50 to 52 US dollars per barrel, which would mean a drop of around a quarter.

On the other hand, US $ 65 marks the highest expected average price for 2018. Commerzbank, which sees the power of OPEC dwindling in the face of the US shale oil power, is in the middle. The more OPEC members cut their production and reveal market shares, the better the US oil industry can advance.

Not to be forgotten is the global oversupply, which would first have to be reduced. Around 60 US dollars for the barrel could therefore be realistic and manageable for the economy.

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