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Date Submitted: 12/19/2014 07:09 PM
16/12/2014
Winners and losers of oil price plunge FT.com
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December 15, 2014 8:20 pm
Winners and losers of oil price plunge
Chris Giles
Inflation and strong dollar could curb global economic impact
S
uddenly the world is awash with oil. A surprise surge in production and weaker than expected global demand for crude have sent oil reserves soaring and prices tumbling. The 40 per cent drop in the oil price to around $60 a barrel since June is by far the biggest shock for the global economy this year. Similar episodes in the past tell us the consequences are likely to be both profound and long lasting. Normally, economists would add “positive” to this list, but doubts are surfacing as never before. The scale of the current oil shock is difficult to exaggerate. While financial markets and commentators were obsessed by rising geopolitical tensions and the latest twists in central banks’ policies in the US, Europe and Japan, even larger forces in oil markets went largely unnoticed. As late as October, a “key concern” of the International Monetary Fund was the risk of an oil price spike caused by geopolitical tensions. Instead, rising production and weaker demand growth have left suppliers competing to find willing customers. Rich country stocks of crude oil have defied the onset of the northern hemisphere winter and risen to their highest level in two years, according to the International Energy Agency. West Texas Intermediate crude oil...