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STEVE CHIOTAKIS: The Japanese economy is running on limited cylinders at best. And that means Japan is expected to use less energy in the foreseeable future. So the price of oil has dropped a bit. A barrel of U.S. crude now costs less than $100. But that may not last for very long.
From London, Marketplace’s Stephen Beard reports.
STEPHEN BEARD: Oil traders and dealers have stopped agonizing over the conflict in Libya and the unrest elsewhere in the Arab world. Today they’re focused on Japan, and the industrial repercussions of the quake. The shattered northeastern region of the country is a major center for car manufacturing. Toyota, Nissan and Honda have all suspended production. Sony and Panasonic have shut plants too. For a big economy that’s heavily dependent on manufacturing that is bound to hit growth.
And that, says Nick McGregor of brokers Redmayne-Bentley, has hit the global price of crude.
NICK MCGREGOR: The impact of the tsunami and earthquake on Japan will be to crimp economic growth there, and of course Japan’s about the third biggest importer of oil in the world. Anything that slows the Japese economy reduces demand for oil.
However, some analysts say this will not last for long. With the shut down of Japanese nuclear power plants, the country will have to import more oil for electricity generation. And that could send the price soaring again.
In London, this is Stephen Beard for Marketplace.