Oil drilling platform 370.
(photo credit: Lee Celano/Reuters)
Relative to other countries, Israel’s economy is fairly safe from shocks to the oil market, a report by HSBC released over the weekend found.
Israel came in 13th on the bank’s Oil Vulnerability Index, which ranked 39 countries based on a scale from least vulnerable at the low end to most vulnerable at the high end.
The index was based on five factors: Net oil consumption, oil imports as a percentage of GDP, energy efficiency, budget balance and government debt levels.
Israel’s ranking was boosted by its moderately efficient energy usage, a zero ranking for net oil consumption, and the fact that its fiscal security was not linked to oil exports.
The price of Brent fell by 12.5 percent since the end of March, the report noted, both because of new supply on the market from Iraq and Libya and expectations of limited demand amidst slow global growth.
While big oil exporters like Mexico, Norway and Saudi Arabia were on the lower end of the vulnerability index, the more exposed nations included the United States in 33rd place, the euro zone in 35th, and Singapore at the very bottom.
“Our Oil Vulnerability Index shows that some emerging market countries are most vulnerable to this drop in prices while other developing countries benefit the most, with the impact on the developed world being more moderate,” the report stated.
For Western countries, the report found, the drop would only have a limited impact.
“For emerging markets, the impact is a lot more pronounced.
Clearly, countries such as Russia and Saudi Arabia, the big oil producers face the most negative growth outlook, while the big oil consumers such as India, Turkey and South Africa benefit most from a drop in oil prices,” the report said.
Though the report went on to calculate both the GDP and inflationary impact of changing oil prices, Israel was not included in those measures.
For the countries in the study, however, a continued drop in oil prices would provide benefit in the form of reduced inflation.