It was costing more than eight Norwegian kroner to buy one US dollar on Monday morning, the weakest level for Norway’s currency in several years. The krone-dollar exchange rate first crossed over the NOK 8 mark late Friday, and stayed there when the price of oil also fell again on Monday morning.
TDN Finans reported Monday that for the first time since April, the price of a barrel of Norway’s North Sea crude oil slipped under USD 60. Prices for contracts for the so-called Brent crude were logged at USD 59.62 Monday morning, down 70 US cents from the last trading day on Friday.
That when the contracts had already fallen by USD 1.75 to USD 60.32 per barrel. The value of Norway’s currency fell, too, to just over NOK 8. On Monday, it cost NOK 8.05 to buy a dollar.
Spot prices for North Sea Brent crude also fell, to USD 59.55 per barrel, down by 11 US cents from Friday. Analysts blamed market nervousness over the Greek debt crisis and, not least, expectations that an international agreement looms over Iran’s nuclear energy program. That would finally ease sanctions against Iran and add its oil supplies to world markets.
It’s the falling oil prices, which first took a dive last summer, that catch most of the blame for the sudden weakness of Norway’s currency after years of record strength. It only took just over five kroner to buy a US dollar a few years ago, as Norway rode the wave of record high oil prices that fueled its important oil and gas industry.
The economic boom times slowed down and now the ripple effects of the lower oil prices are spreading throughout the economy. As oil and offshore investment decline, so do the fortunes of all the supply industries and everything from restaurants to hotels and commercial real estate. While most experts and govenment officials agree that Norway’s economy remains relatively strong, unemployment is rising from rock-bottom levels and it is a “crisis” for those losing their jobs. Meanwhile, the weaker Norwegian krone means that summer holidays just got even more expensive for Norwegians traveling abroad.