Effects of Oil Supply Disruptions on Oil Exporters, Importers - Federal Reserve Bank of San Francisco

Economies may face different challenges during oil supply disruptions depending on whether they primarily import or export oil. Comparing the effects of past disruptions in Canada, a large net oil exporter, and the euro area, a large oil importer, suggests that both experienced rising inflation and declining economic activity. This reflects that the energy sector accounts for a small share of GDP, while oil prices affect global demand and nonenergy sectors. Thus, benefits to the energy sector from higher oil prices were outweighed by the costs to the broader economy. The worldwide rise in oil prices in the past six months has revived questions about their economic effects.