New oil price dip hits krone again

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As the price for a barrel of Norway’s North Sea crude oil sunk once again on Wednesday, so did the value of Norway’s currency, the krone. It took nearly NOK 9 to buy one US dollar Wednesday afternoon, a level not seen since the mid-1980s.

Norway's krone sunk along with oil prices again this week, but that's at least helping some exporters. PHOTO:

Norway’s krone sunk further on Wednesday into the seemingly black hole of lower oil prices. PHOTO:

Norway’s North Sea Brent crude fell to under USD 35 a barrel by mid-day, a level that news bureau AFP reported was the lowest since July 1, 2004. North Sea Brent was trading at USD 34.83, down from more than USD 115 a barrel in June of last year and even higher levels before that.

The new oil price decline was tied to the large supply of oil worldwide, after the US started producing much of its own oil and gas and countries like Saudi Arabia have continued to let their oil gush. The arrival of oil back on the market from Iran has also boosted world supplies, causing several Norwegian economists to claim that the world is simply “awash” in cheap oil.

Tensions between Saudi Arabia and Iran led to a price rise earlier in the week, but that was offset on Wednesday, and Norway’s krone steadily lost value from the morning. By 1:30pm it was trading at NOK 8.969 against the dollar, NOK 9.64 against the euro and NOK 13.14 against the British pound.

Some Norwegian economists have predicted that a US dollar may cost as much as NOK 10 later this year. It all means that prices are likely to keep rising within Norway because imported goods will cost more kroner, while Norwegian exports benefit because they become more competitively priced abroad. Norway’s hotel and tourism industry is also attracting more visitors because room rates, restaurant meals and other goods and services cost less for those from countries with stronger currencies. Berglund


    The weakness of the Norwegian Kroner has not any positive side. It will cause strong inflation in the very short term. That mince weaker salaries. Devaluation will not increase the number of visitors from abroad since domestic prices will follow the inflation. The same applies for the prices of the goods that Norway still exports. Besides, that exports will be not enough to compensate the looses of incomes from the oil and gas industry. So if there are any economist that predicts that devaluation of the currency could be something positive, he lives inside of a tupperware. If the value of the Norwegian currency is the same that in the 80’s, so the Norwegian economy will be back to the 80’s.

    • frenk

      You are 100% correct…….we noticed the ‘price jump’ in electronics about 6 months ago…..
      It would be good if the Norwegian government were more honest about the implications of this oil price drop….and it’s effect on the Norwegian economy….but I don’t believe that the Norwegian population can handle the truth?

      • JooduitHolland

        Most foreign skilled workers from elsewhere in the EU will leave Norway. Especially in the health care sector there is 20% dependency on foreign doctors and nurses especially from Sweden. The moment consumer confidence falls and many foreigners leave, the real estate market collapses and this will have implication for all Scandinavian banks. The Japanese, German and US auto makers compete on who makes the best hybride or energy free consuming vehiecle. No reason that grid or oil/gas price will recover in the coming years. 11-12 NOK per EUR/Dollar will be quite reasonable and wages in Norway will get in parity with German wages. Still the purchase power in Germany will be higher due to 35% cheaper living costs.

      • JooduitHolland

        Small trip to Sweden or Germany will help you a lot? NO salaries are in NOK…

  • JooduitHolland

    It is a great feature that Norway has a Liberal government now who realises that the economy should be reformed. All the Scandinavian and other banks in their reports are writiing from position. They have hundreds of billions of Euros on loans open in Scandinavia. The bubble bursted in the eurozone and will soon burst there also. The moment supply is larger than demand the pain will be huge. There is almost no demand in the West for energy and grid now, China slows down and will keep slowing other emerging markets countries are energy exporters. The Norwegian will do excellent with a rate of up to 12 NOK to EUR/USD like the Icelandic do.

  • Pete

    The positive spin surrounding the 9% boast in fish exports is laughable in other articles. Meanwhile, the cost of oil has dropped by some 70%… Everything is ok right? Well, although things are looking grim here, the likeliness that the NOK will further devalue to USD/NOK 11 or 12 is a doomsday scenario. One that is not likely to happen considering the logic of how much the currency has devalued in relation to how much oil prices have fallen. The continuing fall of the NOK has more to do with uncertainty of the floor for oil prices than the Norwegian economy as a whole. So if prices fall to 20 dollars a barrel, then we will probably see something up towards 10 NOK to a dollar, but Norges Bank will eventually seek to protect the NOK, rather than spur growth by lowering interest rates further… if NOK 11 or 12 were in fact on the horizon, a devaluation of over 100% since 2014 (VERY UNLIKELY). Continuing to lower the rates and devalue the NOK is not in the long term plans, but short term growth and protecting people’s job and keeping the economy out of recession.

    • frenk

      I think you will find that the economy is already in recession….

  • JooduitHolland

    Will be a painful ride with 10$ per barrel crude. The Norwegian government has a structural deficit of 10 percent on its budget. Taking 20 billion euro each year to close that hole. With 10$ a barre the oil fund get inside on year basis instead of 100 billion euro on oil and gas 10 billion. Thats what the export of Germany does in 4 DAYS not in 1 year. The rest of you export is not even 30 billion euro a year (The Dutch is 500 billion, the Swiss 300 billion). China slowing, the west growing slow Brasil Russia net exporter of Energy and bad economy and the new fields of Norway have a break even of 60$ per barrel. In 20 years you deplet that soverign fund.