TOKYO, Jun 30, 2008 (AsiaPulse via COMTEX) -- The transfer of wealth from oil consumers to producers is accelerating, with about 200 trillion yen (US$1.9 trillion) to flow from the U.S., Europe, Japan, and other parts of Asia to oil-producing nations in the current year if crude oil prices stay at current levels, The Nikkei learned Friday.
The estimate was made using such data as BP Plc's oil trade statistics. It is based on the assumption that the volume of oil traded will be at the 2007 level and that crude prices will remain at US$140 a barrel for the rest of the year. The total figure represents payments for crude made to four oil-exporting regions: the Middle East, the former Soviet republics, South and Central America, and Africa.
The total transfer of wealth this year is projected at 1.87 trillion dollars, or about 199 trillion yen. The figure, in dollar terms, is about 70 per cent higher than for 2007.
The outflow of money is largest for the U.S., which will pay 556 billion dollars, or roughly 59 trillion yen. Japan will pay 230 billion dollars, or about 24 trillion yen.
Although the global economic slowdown is expected to weaken demand for oil this year in the industrialized nations, demand is projected to keep growing in emerging countries in Asia and elsewhere. According to JPMorgan Securities Japan Co., worldwide demand is forecast to dip about 0.6 per cent on the year. So weaker demand is not expected to substantially slow the transfer of wealth.
These figures cover only payments for crude oil, so they are different from the balance of trade, which shows a country's overall imports and exports. The Middle East, which is seeing a huge inflow of oil money, is increasing imports of such products as automobiles and construction machinery from industrialized nations.
In addition, there have been several cases in which sovereign wealth funds of Middle Eastern countries have provided capital to U.S. financial institutions reeling from losses due to the subprime mortgage crisis. The region will likely become a leading provider of funds for corporate acquisitions and other activities.
Japan is increasing exports of automobiles, construction machinery and other products to oil-producing nations, but the total value of such goods was only around 10 trillion yen in 2007. A rise in payments for crude oil erodes corporate profits and hurts consumer sentiment.
In Japan, the projected outflow of wealth is 5.3 per cent of gross domestic product, higher than the 4.2 per cent for the U.S. and 3.7 per cent for Europe. Soaring crude oil prices have led to higher prices in such other areas as iron ore, food and coal, so the outflow of wealth for Japan as a whole will likely grow.
Crude prices reached about US$10 a barrel during the 1973-74 oil crisis and were at around US$36 during the second oil crisis in 1979 and 1980. Back then, the amount of oil being traded was around 60 per cent of the current level, so the transfer of wealth now is much higher than during the previous oil crises.
http://news.tradingcharts.com/futures/2/8/110568682.html?mpop
The estimate was made using such data as BP Plc's oil trade statistics. It is based on the assumption that the volume of oil traded will be at the 2007 level and that crude prices will remain at US$140 a barrel for the rest of the year. The total figure represents payments for crude made to four oil-exporting regions: the Middle East, the former Soviet republics, South and Central America, and Africa.
The total transfer of wealth this year is projected at 1.87 trillion dollars, or about 199 trillion yen. The figure, in dollar terms, is about 70 per cent higher than for 2007.
The outflow of money is largest for the U.S., which will pay 556 billion dollars, or roughly 59 trillion yen. Japan will pay 230 billion dollars, or about 24 trillion yen.
Although the global economic slowdown is expected to weaken demand for oil this year in the industrialized nations, demand is projected to keep growing in emerging countries in Asia and elsewhere. According to JPMorgan Securities Japan Co., worldwide demand is forecast to dip about 0.6 per cent on the year. So weaker demand is not expected to substantially slow the transfer of wealth.
These figures cover only payments for crude oil, so they are different from the balance of trade, which shows a country's overall imports and exports. The Middle East, which is seeing a huge inflow of oil money, is increasing imports of such products as automobiles and construction machinery from industrialized nations.
In addition, there have been several cases in which sovereign wealth funds of Middle Eastern countries have provided capital to U.S. financial institutions reeling from losses due to the subprime mortgage crisis. The region will likely become a leading provider of funds for corporate acquisitions and other activities.
Japan is increasing exports of automobiles, construction machinery and other products to oil-producing nations, but the total value of such goods was only around 10 trillion yen in 2007. A rise in payments for crude oil erodes corporate profits and hurts consumer sentiment.
In Japan, the projected outflow of wealth is 5.3 per cent of gross domestic product, higher than the 4.2 per cent for the U.S. and 3.7 per cent for Europe. Soaring crude oil prices have led to higher prices in such other areas as iron ore, food and coal, so the outflow of wealth for Japan as a whole will likely grow.
Crude prices reached about US$10 a barrel during the 1973-74 oil crisis and were at around US$36 during the second oil crisis in 1979 and 1980. Back then, the amount of oil being traded was around 60 per cent of the current level, so the transfer of wealth now is much higher than during the previous oil crises.
http://news.tradingcharts.com/futures/2/8/110568682.html?mpop
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