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DW-World
Studio Guest – Christine Schweikert on the oil price
Studio Guest – Christine Schweikert on the oil price
Christine Schweikert is an expert for raw materials at BHF-Bank in Frankfurt/Main. We talk to her about the current price of oil and its impact to the economy. DW-TV: Well, the whole world is hungry for energy, oil in particular is in high demand, joining us now is Christine Schweikert from the BHF Bank. OPEC countries, however, hesitate to pump more oil, saying supply is sufficient. Why then does the price of oil continue to break records on a daily basis? Christine Schweikert: Well, I think OPEC is right actually for once. The demand-supply balance is quite well adjusted and there is no fundamental reason for the price of oil to have been increasing so rapidly. It's this massive inflow of investor money into commodities – not just oil, other commodities as well and I believe that's just a consequence of the financial crisis -- of the banking crisis – and I believe that's the reason why oil is so expensive at the moment. DW-TV: Which is related to the weak US dollar and as well all know the dollar has taken a nose dive over the past 12 months definitely since last summer – when the US home loan crisis started to hit home – the once-strong US currency has tumbled, whereas the price of oil is reaching heights no one believed possible. What does this mean for us – how long can we actually afford oil? Christine Schweikert: Well, I think it's going to be a huge problem that oil keeps getting more and more expensive for consumers, for producers and that in combination with weaker growth that we're probably going to see – all that together is quite a lethal cocktail. What I do hope will happen is that the ECB will have to lower interest rates as well and that will stabilise the dollar as well to some extent because then although the US central might have to cut rates further and further, if other countries follow suit then the gap is not quite as wide. That may lead to some kind of stabilization of the dollar. DW-TV: It's not just oil, other raw materials such as gold, for example, have dramatically gained in value - what would happen to those commodities once the dollar is more stable again? Christine Schweikert: Welll, then they're going to move sideways for a while. I believe there is quite a huge potential for correction because what we're seeing now is a huge bubble now building up across a number of commodities and one day that's going to burst, so investors should really beware if they want to go into commodities now. DW-TV: So far we here and euroland haven't been too bothered by the price of oil. Could it be that the price of oil could ever be dependent on the price of the euro rather than the dollar? Christine Schweikert: Well, I don't see that at the moment actually. We keep on getting comments that Saudi Arabia is thinking of switching to the euro or Iran, but I reckon that oil will remain denominated in oil for a considerable time in the future. (Interview: Monika Jones)
DW-World | March 18, 2008
