High oil + low euro = more trouble for Europe

17 Feb 2012 by Jim Fickett.

The debt crisis has pushed the euro down, so that oil priced in euros is back to the 2008 high.

The Financial Times reports:

The eurozone is weathering an “oil shock” of similar proportions to that of mid-2008, when benchmark crude oil prices rose to almost $150 a barrel.

True, the cost of Brent in US dollars remains well below the record high of $150 a barrel, hovering at a six-month peak of $120 a barrel. But add into the mix the weak euro against the dollar – far below the levels of three-and-a-half years ago – and the result is that eurozone consumers are paying almost the same price for oil as they did back in 2008.

In euros, the cost of Brent rose this week to a three-year high of €91.70 per barrel, less than 2 per cent below the all-time high of €93.50 a barrel set in July 2008. An euro-denominated record high for oil prices could be set next week if the current trends in commodities and currencies continue.