The voters’ decision to leave the EU has created a global ripple effect. The global oil market is now getting ready for a longer delay in investments and pricing suppression, an economic slowdown not needed at the time.
Immediately, the value of a pound dropped to a thirty-year low of $1.34, the price of Brent fell 5%, and the world’s stock exchanges experienced a plunge.
According to Douglas-Westwood, the energy intelligence group, short term effects for Shell, BP and Tullow will actually benefit from the devaluation of Sterling and see a boost in reported revenues as a result, with a large proportion of dollar-denominated revenue from abroad.
The everyday consumer, however, will experience the greatest hit as prices rise due to the exchange rate of imported oil. “For now, we are left with a perception of risk generated by uncertainty over what ‘Brexit’ actually means,” DW reports. Negotiations on when and how to exit the union have not yet been discussed, and The Prime Minister makes clear that he will leave the trigger of Article 50 for the next leader.
DW concludes there is still the possibility the government will give a ‘Brexit-lite’ outcome, even no Brexit at all.
Article written by HEI contributor Marcela Abarca.