THE EURO AND OIL - A FUTURE DILEMMA FOR N ORWAY

The euro, if it is realised, has the potential to put an end to the U. S. and dollar hegemony in world trade and finance, so far not disputed . The euro has, however, little chance of establishing its own hegemon y comparable to that of the U.S. dollar. After a period of competitive substitution, there will be a competitive coexistence between the eur o and the dollar. Oil trade could play an important part in this game, but any serious challenge to the position of the dollar raises huge r isks for the oil industry. The oil producers would only have an intere st in pricing their crude in euro if it appreciates against the dollar . Even if European demand does not count much in the formation of oil prices, the North Sea production and the Brent market have a key role. The Brent market to a large extent determines oil prices in the Atlan tic, in the Mediterranean, in the Gulf, and even in Asia. For the esta blishment of euro as a currency of international trade, a conversion o f the Brent market to euros would be an important victory. The game is , however, as much political as economic. Within the OPEC, Iran, Iraq and Libya could have a political interest in hurting the United States by pricing their oil in euros. In the North Sea, Britain and Norway c ould have an economic interest in pricing their oil in euros, but thei r political links with the United States could weigh in the opposite d irection. The stakes are enormous. The North Sea and the Gulf producer s will essentially decide the outcome.