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from.– Oil Crisis...is
the world about to be shocked
European Growth and the Coming
Oil Crisis
Tiscali-Europe
Europe has only just begun to recover from the White House's weak dollar
policy which was hampering the long awaited economic growth in the
Eurozone but now that the dollar has begun to bottom out the dampening
influence is now coming from the Persian Gulf with rising oil prices. A
barrel of oil stands at over $US 50, Europe's economic recovery may have
to wait.
European finance ministers have had to scale down their forecasts for
the next few years and dreams of overtaking the United States in 2010
are now very much on the back burner. The European Central Bank braved
out the dramatic drop in the value of the dollar but the upcoming oil
crisis, and analysts say that it is merely a question of time, may be
more difficult to weather.
The collective finger is being pointed at the Chinese who have increased
their demand for oil significantly to fuel their burgeoning economy.
This spectacular demand has taken the slack out of the oil market and if
demand were to increase suddenly prices would go through the roof.
This is not a 70s crisis but a crisis that would be triggered by
disruption to supply or an increase in the frequency of attacks on Iraqi
pipelines to sabotage the coalition attempt to syphon off Iraqi crude
oil supplies. Further disruption to Iraq's oil supply would lead to a
price rise but the real fear is a terrorist attack on the oil sector's
"central banker" Saudi Arabia, or more dramatically if the Saudi royal
family were to be ousted from power throwing the country and the region
into chaos.
The Saudi kingdom is rife with rumours about expected attacks and
analysts are terrified that one well placed bomb could throw oil traders
into a panic.
Europe, like the US and Japan would be vulnerable to a significant rise
in the oil price. The US is beginning to show signs of growth despite
the country's huge debt burden and Japan appears to be emerging from the
fog of deflation but Europe has in many countries been seeing 1% growth
for the last two or three years and another extended period of sluggish
growth may take the wind out of Europe's sails.
All eyes on Saudi Arabia.
Allston Mitchell
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