• 5 minutes Trump will capitulate on the trade war
  • 7 minutes China 2019 - Orwell was 35 years out
  • 12 minutes Glory to Hong Kong
  • 15 minutes ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 13 hours Peaceful demonstration in Hong Kong again thwarted by brutality of police
  • 7 hours Here's your favourite girl, Tom!
  • 17 mins Canada Election Deadlock?
  • 24 hours Civil Unrest Is Erupting All Over The World, But Just Wait Until America Joins The Party...
  • 19 hours Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 36 mins Clampdown on Chinese capital flight is shutting down their commercial construction in US
  • 7 hours IMO 2020:
  • 1 day Australian Hydroelectric Plant Cost Overruns
  • 21 hours China's Blueprint For Global Power
  • 17 hours Nigeria Demands $62B from Oil Majors
  • 1 day Ford Planning Huge North American Charging Network
  • 17 hours Deepwater GOM Project Claims Industry First
Alt Text

A Crisis Is Brewing For Offshore Oil

Times are hard for both…

Alt Text

Are U.S. Sanctions Killing Crude?

U.S. sanctions on Venezuela and…

Alt Text

The Holy Grail Of Energy Is Finally Within Reach

Nuclear fusion, the holy grail…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

How Greece Crisis Could Drag Oil Prices Down

The Greek tragedy is reaching its climax.

The discussions between Greece and its European creditors broke down over the weekend, with the two sides still at an impasse. Greek Prime Minister Alexis Tsipras balked at deeper austerity cuts to the Greek economy, cuts that are a prerequisite for further help from Berlin and Brussels.

As a result, Greece is approaching the precipice. With a massive debt payment due on June 30 to the IMF, Greece could default. The extent of the fallout is anybody’s guess, but Greece could see the value of its bonds plummet, putting its banks in crisis, and ultimately the country could be ejected from the Eurozone. The Greek government declared a bank holiday for six days in order to stop the cash exodus from the Greek financial system. Related: New Safety Feature: A Smart Car Programmed To Let You Die?

The crisis is dragging down global equity and commodity markets. Greece is not a major oil producer or consumer, so it won’t have much sway over oil markets directly. But the spillover could have two immediate effects on oil apart from supply and demand fundamentals.

First, the calamity is spooking investors who fear a broader contagion. While Europe has had several years to insulate itself from Greece’s problems, the mess is still weighing on the bloc’s economic prospects. That will likely pull down oil prices a bit. Related: U.S. Oil Glut An EIA Invention?

A second effect comes in the form of currency fluctuations. Greece’s calamity, and the rising prospect that it leaves the Eurozone, will damage the value of the euro. As the euro takes a hit, the U.S. dollar looks better by comparison, both as a safe haven and as an investment vehicle. If the dollar appreciates, that will push down oil – since oil is priced in dollars, a stronger dollar makes it more expensive. Related: This Week In Energy: Oil Prices Under Pressure From All Sides

The effects could be temporary. If the chaos doesn’t spread beyond Greece, the markets will go back to business as usual. Even if Greece experiences dire economic consequences, if other EU member states are not dramatically affected, and if the euro itself appears safe, global markets including oil should move forward without lingering damage.

On the other hand, if Greece starts dragging down the Eurozone and the euro, oil prices could fall much further.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Jenny Klaus on June 29 2015 said:
    Oh my God! Cheap oil is here to stay

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play