Oil prices in Europe near 2008 peak levels

The price of oil in Europe is rising, in part due to a supply cut from Iran and in part due to inflationary monetary policies.

|
Todd Weddle/AP/St. Joseph News-Press
Bobby Thompson, of St. Joseph, Mo., fills is gas tank at the Shop $ Hop at County Line Road and the Belt Highway Monday, Feb. 20, 2012 in St. Joseph, Mo. Oil prices in Europe have risen to near peak 2008 levels.

Oil prices have recently risen, in part because of inflationary monetary policies and in part because the supply of oil from Iran is falling as the U.S. and the EU targets it with sanctions and as Iran has stopped deliveries to Europe even before the sanctions were formally implemented.

With the WTI oil price at around $105 per barrel still well below the July 2008 peak of $147 per barrel it would seem that things aren't that bad. However, that is misleading for two reasons. First of all, despite being misleadingly touted by the financial media as "the oil price", the WTI price has only a limited real world relevance and the more important Brent crude price is at $120 per barrel a lot closer to the 2008 peak.

Secondly, the dollar was much weaker in July 2008 than it is now. At that time, the dollar was trading at $1.60/€, now it is trading at $1.32/€. Thus, while oil is still cheaper to Americans than it was in July 2008, for Europeans it has returned to the roughly €90 per barrel level that we last saw in July 2008.

That is of course going to put further pressure on European economies (except for Russia and Norway who benefits as exporters of oil), including the crisis hit ones in Southern Europe, while also illustrating the downside of a weak currency. A weak currency may raise nominal export earnings, but it will also make oil and other imports more expensive.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
The Christian Science Monitor was founded in 1908 to lift the standard of journalism and uplift humanity. We aim to “speak the truth in love.” Our goal is not to tell you what to think, but to give you the essential knowledge and understanding to come to your own intelligent conclusions. Join us in this mission by subscribing.
QR Code to Oil prices in Europe near 2008 peak levels
Read this article in
https://www.csmonitor.com/Business/Stefan-Karlsson/2012/0222/Oil-prices-in-Europe-near-2008-peak-levels
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe