Oil-producing countries have increased their imports from the euro area and so have helped offset the negative impact on economic growth in the region, the European Central Bank (ECB) said today.
This marks a change from previous oil shocks, when oil producers ran large trade surpluses, the ECB said in a feature examining the recycling of oil wealth in its July monthly bulletin.
Oil producers also are buying more euro-denominated assets since crude has tripled in value to over $60 a barrel since early 2002, it said. Oil revenues for countries in Opec and the Commonwealth of Independent States, which produce 70 per cent of internationally traded oil, have risen to more than $430 billion in 2004 from $250 billion two years earlier, the ECB said.
These extra earnings boosted deposits in the international banking system by about 3 per cent in the 2002-2004 period - far less than the near doubling of net banking liabilities to Opec countries seen during the previous oil climb in 1998-2000, Bank for International Settlements data show. Opec countries also appear to be diversifying their holdings into euros.
US dollar assets fell from 75 per cent of total deposits in the third quarter of 2001 to 61.5 per cent in the second quarter of 2004, while euro assets rose from 12 per cent to 20 per cent over the same period, the ECB said.
However, there also was a 46 per cent increase in US Treasuries holdings by Opec countries from April 2003 to April 2005, it said.
On the trade front, Opec and CIS imports rose on average by 18 per cent and 22 per cent annually between 2001 and 2004 in nominal dollar terms. Imports from the euro area grew even more sharply - at 22 per cent and 34 per cent respectively.