Lecturer: Norway Should Find Means of Trade Being Less Dependent on US Dollar

North Sea oil price has dropped. According to Norway's national budget, a drop of $1 in global prices implies a loss of 470 million dollars for the state’s revenue. Sputnik discussed this with Doga Eralp, a lecturer of international peace and conflict resolution at the School of International Service and co-director of the South West Asia Group.

Sputnik: Now with oil having such an enormous impact on Norway's economy what steps can the country take to protect itself now?

Doga Eralp: Norway already has a quite an advanced and diversified economy but obviously the problem with Norway's agility vis-a-vis its oil export is the state-owned structure of the Norway's largest oil export company and the fact that it actually adds up to 21% of the state's revenue and 17% of its GDP, so it's different ways Norwegians could address this: A) cut the cost of production, they're already looking into ways of doing it, so one way of doing it is really to control the manned oil platforms in the North Sea through these headquarters in land, so that would mean they would actually spend less on personnel cost, and secondly, they also need to find out other means of conducting trade, not being that much dependant on the US dollar so they need to speak with other crude exporting nations and figure out a way to change this practice.

Sputnik: Just give us an insight into what you forecast could be for economic woes for a country like Norway if there's an extended period of low oil prices. What can you share with our listeners?

Doga Eralp: As you know the US administration provided a number of temporary waivers to countries, but obviously once the limit of those waivers expires these countries would also would need to rethink how they're going to set oil prices and so far the US administration did ask to keep oil prices down, primarily the OPEC countries and pump more oil. US is already doing it and Saudis, obviously, as a response to the ongoing turmoil around the Khashoggi murder is trying to soften the US tone towards Riyadh.

So they're also pumping a lot of oil but obviously this can't last forever and other countries that are so dependent on oil exports would sooner or later, they're already doing it, would look for alternative ways of doing trade, so for that matter important countries in oil such as Venezuela, Russia and others countries that are involved in natural gas and Norway, by the way, is the third largest exporter of natural gas in the world while they only account for about 2% of the oil exports globally. They actually start using that bargaining chip vis-a-vis the US kind of feeling with the natural gas and pushing the US kind of to give in a little bit more on the oil price.

READ MORE: OPEC, US Policies May Swing Oil Prices Within $60-80 Range — IEF Chief

Sputnik: Previous reports stated that many states are now seeking alternative to the American dollar to conduct operations on the oil market, what suggestions and advice can you give?

Doga Eralp: I think obviously there's the euro but as you see these days European Union has its own woes trying to manage the impending Brexit, there are other currencies, the Chinese currency that may work. But the world markets and the relations between different countries who are really important actors in oil production are not as smooth as one would like.

So they would come up with an alternative trade regime that exists now in the oil market, so obviously we need to wait a year or so for these actors to get their act together and agree on what the next steps maybe and also keep in mind that by then the US might already switch its course vis-a-vis that. So at this point, there's a particular search of an alternative, different currency, but there's no agreement about which currency that may be, there's no strong candidates but there's no acting on that.

Sputnik: The US President since his inauguration has been very strong, very robust on his attitude globally in terms of economy, sanctions and his strategy, particularly Iran's JCPOA is having negative effects on various economies, what reaction could we expect from US to this particular situation that we've just been talking about for the last ten minutes?

Doga Eralp: We need to start thinking about what type of an alternative response those countries dealing with Iran may give. There's already a momentum with the Europeans, with Russians and Chinese and also Turkey for that matter with determination to continue trading with Iran. But if that really is the case, all sides across the Atlantic should figure out a way to do it without really annoying one another.

READ MORE: Iranian FM: US Sanctions Cannot Have Dramatic Impact on Oil Exports

We also need to keep in mind there's a growing number of forces in the United States domestic politics who are discontent and concerned with this rather harsh Iranian sanction policy of the Trump administration and now with the Congress under the control of the Democrats, especially the House, we may expect the Trump administration to tone down its rhetoric, but if may also go another way, it's not that easy to predict with Trump as the 2020 elections approach Donald Trump may actually provide a more harsher rhetoric.

The views expressed in this article are those of the speaker and do not necessarily reflect those of Sputnik.