Petro dollar is a term coined to denote dollar earned over selling of petroleum products. Importance of petro dollars are of high importance in global financial system as these idle dollars usually chase real estate markets, luxury resorts also equities and bonds to some extent.
- Traditionally OPEC’s large sovereign funds are one of the top investors in global financial market and real estate. However sharp drop in oil prices are leading to lack of petro dollar in the market.
- Moreover current situation would lead to oil producers, exercising extra caution and keeping the dollar earned to themselves.
According to EIA estimate, situation have already been bad in 2014, however it is going to be far worse in 2015.
- In 2014, OPEC (excluding Iran) earned about $730 billion from oil revenue, 11% lower than 2013.
- In 2015, revenue is estimated to drop to $380 billion, as average yearly price is expected to be much lower than previous.
Oil producing countries’ will be experiencing greater budget crunch in 2015, as per capita oil export earnings are expected to be halved by the year, which will lead to lower net investment from sovereigns.
The material has been provided by InstaForex Company – www.instaforex.com