Oil prices soared to a record high in euro terms, surpassing the peak touched in the 2008 price spike and posing a fresh problem for eurozone economies already struggling under the weight of the region’s debt crisis.
The euro-denominated price of Brent crude, the global benchmark North Sea crude, rose to a peak of €93.63 a barrel on Thursday, surpassing the previous high hit on July 3, 2008. The new euro record comes just a day after Brent hit a record in sterling terms.
“This is a regional oil shock,” said Amrita Sen, commodities analyst at Barclays Capital in London.
This raises a few interesting points.
1.) The EU region has a far different relationship with oil than the US. Taxes are already high, meaning use is way down. Public transit is the norm. So, how much of a shock can this already have? The answer -- like all economic answers -- is it depends. My thoughts are with an economy already teetering between expansion and contraction, this will be a problem.
2.) Can the US de-couple from an EU slowdown? That's a good question. Usually, the answer is no; economies are far too integrated to prevent a bleeding through of problems.
An EU slowdown is one of the biggest risks to the US economy right now.