MOSCOW, December 26. /TASS/. The stronger positive correlation between the US dollar and the oil price observed benefits the United States but this is not a very good trend for other countries, visiting professor of the Russian New Economic School Alexander Malanichev said in his column for the InfoTEK information and analytical center.
Oil prices were growing from their lowest indicators in 2020.
"At the same time, a strong positive correlation was detected in this time period between the oil price and the dollar index DXY, which is a mean geometric rate of the US dollar against the basket of six foreign currencies: the euro (EUR) - 57.6%, the yen (JPY) - 13.6%, the pound sterling (GBP) - 11.9%, the Canadian dollar (CAD) - 9.1%, the Swedish krona (SEK) - 4.2%, and the Swiss franc (CHF) - 3.6%. The stronger is the dollar against them, the higher the index will be," the expert said.
"As a result of the co-directional movement of the dollar and the oil price, US oil consumers and producers are benefiting from the energy price growth. The strong dollar enables acquiring imported goods at a cheaper price, while the high price stimulates revenues of oil producers and investors, and production," Malanichev said.
The stronger positive correlation between the dollar and the crude oil price is not a very good piece of news for rest of world, the Professor noted. "The growing dollar value combined with the rise in energy prices will restrain economic growth. While dollar weakening in the past protected oil consumers in the greater portion of the world against the increase in energy prices, consumers at present face the double blow - higher dollar prices for oil and even higher prices in their own currency. For example, internal oil prices in the US surged by 160% from 2022 year start in Japan, compared to 75% in the US," Malanichev noted.
The embargo on seaborne shipments of Russian oil did not have a positive effect for the price, "although many market observers predicted and predict a notable contraction in volumes of oil supplies to the global market," the expert added.