The extraordinary sensitivity of euro-zone growth to small shocks to global oil production

Since 2014 in particular, and even in the recent period, there have been very drastic moves in the oil price. These movements are caused by quite small shocks affecting oil production, whose effect on prices is multiplied by the low price elasticity of global demand for oil in the short term. The problem is then that a small move in oil production may result in a major change in growth in oil-importing countries, for example in the euro zone. A 1 million bbl/day over- or underestimation of 2019 global oil production leads to an error of 13 dollars per barrel for the price and of 0.4 percentage point for euro-zone growth.