Oil-price drop is one of the most important developments shaping the global outlook” – Janet Yellen, The chair of the Federal Reserve

Oil prices have fallen significantly since the mid of 2014, and this is having a marked influence on the global economy. This startling price shift has already led to some wide-ranging market adjustments, while the longer-term implications of the move have left much for investors to digest.

The fall in oil prices was brought on primarily by a supply-side glut, pushed by shale finds in North America, the return of previously disrupted production in Africa and the Middle East, as well as a weaker global-demand backdrop.

The adjustment in oil prices has already led to some cutbacks in supply but, even so, there is a growing realisation that this oil move could be longer lived.

So what are the implications?

  • Given that a number of the world’s largest economies are net oil importers, does the move in the price of ‘black gold’ provide growth impetus for these markets?
  • Could it also push some regions into a deflationary spiral?
  • Furthermore, does the opportunity afforded by the falling price give governments a means to avoid implementing structural reforms, as they rest on the cushion of an unexpected budgetary windfall?

In this paper, a panel of specialists from BNP Paribas will discuss what lower oil prices mean for both developed and emerging economies, and whether the revaluation and re-evaluation of energy inputs may help or hinder these economies.

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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