Forex Flash: Oil demand to drop by 1/3 if Greece exits Euro – Merrill Lynch

By FXstreet.com,  June 20, 2012, 06:15:00 AM EDT

FXstreet.com (Barcelona) - Merryll Lynch economists see the Eurozone , with contagion spreading from banking woes to economic growth expectations, infecting global oil prices. Oil demand could drop by one third if Greece exits the Euro and a disorderly break-up would see Brent oil prices dropping to as low as $60/bbl.

Oil prices above $135/bbl would mean 9% of global GDP taken by energy, leading to a severe crisis. "Global current account ( CA ) imbalances are at the heart of ongoing economic woes. In an oil supply-constrained world, oil demand in CA deficit countries has to adjust lower to make room for fast growing surplus nations", wrote the analysts, pointing however to negative USD real rates that discourage oil sector output and investment, able to push up Brent prices by 6% in one year if there's a 100bps decrease in USD real rates.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.


This article appears in: Investing, Forex and Currencies

Referenced Stocks: CA



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