Sanctions and a Freezing Winter Benefit Norway. Daily Revenues See Huge Increase
The price of oil has reached its highest level in six months. This means a significant increase in Norway's energy export revenues.
The energy sector is susceptible to changes resulting from the political situation.
Fot. Jan Arne Wold, Øyvind Gravås/materiały prasowe Equinor
On February 23, a barrel of Brent crude from the North Sea cost $72.30, which is just under 700 NOK. Since the beginning of the year, the price has risen by about $10, or nearly 100 NOK per barrel. According to experts, higher oil and gas prices translate into hundreds of millions of NOK in additional daily revenues. Norway currently earns more from gas than from oil.
Rising Oil Prices Boost Revenues
Robert Næss from Nordea calculated that Norway produces over 2 million barrels of oil per day. Since the beginning of the year, the price has increased by about 100 NOK per barrel. This means around 210 million NOK in additional daily revenues. The rise in oil prices directly feeds the state budget.
In January, gas revenues amounted to 50 billion NOK. At the same time, oil revenues reached 40 billion NOK. Næss emphasized in NRK that Norway is now more of a gas country than an oil country. He notes that the importance of gas exports is often underestimated.
In January, gas revenues amounted to 50 billion NOK. At the same time, oil revenues reached 40 billion NOK. Næss emphasized in NRK that Norway is now more of a gas country than an oil country. He notes that the importance of gas exports is often underestimated.
The scale of revenues demonstrates the importance of raw material exports for the country.Photo: Adobe Stock, standard license
Geopolitics and Weather Drive the Market
Ole-Rikard Hammer from Arctic Securities points to two main reasons for the rise in energy prices. The first is geopolitical tensions. US President Donald Trump has announced readiness to impose sanctions on Iran, Russia, and partly Venezuela. There have also been threats of military intervention against Iran.
According to Hammer, potential disruptions in oil supplies could push the price up to $100 per barrel or more. However, if the situation remains at the level of threats, prices may not reach such heights. The second factor is the weather. Europe and the USA have experienced periods of exceptionally low temperatures.
Low temperatures have increased demand for gas and affected prices. Exports from the Middle East account for about 20 percent of global supplies. The threat of disruptions in this region immediately impacts the market. Norwegian gas has gained importance after sanctions were imposed on Russian resources in 2022.
In January, according to Næss's calculations, on some days Norway earned as much as 400 million NOK more thanks to high gas prices. Currently, this level has dropped, but it still means about 100 million NOK in additional daily revenues compared to the beginning of the year. The scale of these amounts shows that with ongoing international tensions and increased demand for energy, export revenues may remain elevated in the coming months as well.
According to Hammer, potential disruptions in oil supplies could push the price up to $100 per barrel or more. However, if the situation remains at the level of threats, prices may not reach such heights. The second factor is the weather. Europe and the USA have experienced periods of exceptionally low temperatures.
Low temperatures have increased demand for gas and affected prices. Exports from the Middle East account for about 20 percent of global supplies. The threat of disruptions in this region immediately impacts the market. Norwegian gas has gained importance after sanctions were imposed on Russian resources in 2022.
In January, according to Næss's calculations, on some days Norway earned as much as 400 million NOK more thanks to high gas prices. Currently, this level has dropped, but it still means about 100 million NOK in additional daily revenues compared to the beginning of the year. The scale of these amounts shows that with ongoing international tensions and increased demand for energy, export revenues may remain elevated in the coming months as well.
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