The high Oil price is good for the US and bad for the Eurozone – Natixis

Share:

OPEC countries’ new strategy is driving up Oil prices. Economists at Natixis analyze the big difference between the effects of high Oil prices on the US and the Eurozone.

The Eurozone is getting poorer relative to the US

The new strategy of the OPEC countries, with their production cuts, will result in fairly high Oil prices for the long term.

Since the US is an Oil exporter and the Eurozone is an Oil importer, a high Oil price increases US real income and reduces Eurozone real income.

For every $10 rise in the price of Oil, the US becomes 0.11% richer as a percentage of US GDP and the Eurozone becomes 1.65% poorer as a percentage of Eurozone GDP.

This enrichment of the US and impoverishment of the Eurozone will therefore probably be long-lasting since the new strategy of OPEC countries is also long-lasting.