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Lower Oil And Gas Prices Mean Lower Revenues For Norway

 

Oil prices plunge after new U.S. tariffs and increased oil production. A lower oil price can have both positive and negative consequences for you.

Oil prices have fallen for five days in a row, driven by increased production from Saudi Arabia and fears of a trade conflict after new US tariffs. The market is now characterized by great uncertainty. For you, the low prices will mean cheaper fuel.

Photo: Tore Meek / NTB

The price of oil (Brent oil) has today been down to $62 a barrel. This is the fifth straight day of decline. It is now at its weakest level since 2021.

The decline began when US President Donald Trump presented the new tariffs.

We are closely monitoring market developments. The market is reacting negatively to increased tariffs and the potential consequences of a trade war, says oil fund manager Nicolai Tangen  to NRK.

Tangen adds:

We have repeatedly said that we cannot expect the market to continue to rise, and we must be prepared that the time ahead may be demanding.

Warning lights in the oil market

Oil analyst Ole-Rikard Hammer at Arctic Securities says the market is characterized by great uncertainty.

Trump's tariff move is having an impact on the level of economic activity. Many economists are now expecting a significant economic setback.

Ole-Rikard Hammer is an oil analyst at Arctic Securities, and is closely following developments in the energy markets. Photo: NRK

The reason why the oil price is affected by the high tariffs, he says, is because oil consumption is closely linked to economic activity.

Oil is used for transportation and industry.

Not very low prices

Hammer still says there is no reason to panic – even though he refers to the plunge in oil prices as panic selling.

$62 a barrel is not a very low price if we look at the historical price trend. It could fall further without there being a complete crisis, says the oil analyst.

Although $62 a barrel is the lowest level in several years, the oil price has been much lower before.

During the corona pandemic in 2020, it plunged to below $20 a barrel. In 2008, it was as high as $147 before collapsing again when the financial crisis hit.

The oil price is determined by supply and demand. When many people need oil, the price rises. When fewer people need it – or more is produced than the market needs – the price falls.

He also emphasizes that the fall we have seen now does not mean that oil production is falling.

World oil consumption is increasing, he says.

Lower oil and gas prices mean lower revenues for Norway. And a higher tariff will lead to less demand for oil.

It is far too early to say whether the decline will have an impact on activity on the Norwegian shelf.

Aker BP platform Valhall in the North Sea. The Valhall field, which consists of a total of six oil platforms, has been producing oil since 1982. The facility has produced over 1 billion barrels of oil since then and has the ambition to pump up 500 million more barrels of oil before it is shut down. Ole-Rikard Hammer cannot say for sure whether the low oil prices will lead to less activity on the Norwegian shelf.  Photo: Håkon Mosvold Larsen / NTB

Cheaper petrol and diesel

Ståle Kyllingstad owns the IKM group, which consists of a number of companies in the oil service industry.

He points to one reason other than tariffs for the sharp drop in oil prices: namely that Saudi Arabia decided a few days ago to increase production.

It is not a good sign, because it is actually an oil balance and maybe even overproduction. Saudi Arabia is tired of holding back its production so that other countries run away with the profits, he says.

Ståle Kyllingstad, owner of the oil service company IKM, points to increased production in Saudi Arabia as an important reason for the price drop. He fears less exploration and higher inflation. 

For ordinary people, lower oil prices can lead to cheaper fuel and lower electricity prices, especially when gas prices also follow. But in the long term, it could backfire if the oil industry slows down and jobs disappear.

Source: NRK (in Norwegian)

10.04.2025