Euro zone: Important that the oil price does not rise too much

The oil price has been rising in the second quarter of 2019, due to persistent ly strong global demand for oil, the decline in production in Saudi Arabia and Libya, the US announcement of the end of exemptions to Iranian oil sales, and the decline in investment in shale oil in the United States. The fall in the oil price in the second half of 2018 bolstered the euro-zone economy in 2019, and it is important that a sharp rise in the oil price does not come on top of the other causes of a slowdown (production of capital goods and cars, fiscal policy that will no longer be expansionary) in 2020. A 10 euro per barrel rise in the oil price increases euro-zone inflation by 0.3 percentage point (pp) and reduces euro-zone real income by 0.4 pp of GDP.