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 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.