The unrest in the Middle East and North Africa is not jeopardising the oil supply to the Netherlands. As the Netherlands notably maintains strong trade relations with politically stable countries in this region, the Dutch balance of payments is barely affected by the political unrest.
Oil imports
The political unrest in the Middle East and North Africa does not pose a threat to our oil imports. This is a completely different situation to that in the early 1970s, when the Netherlands was almost totally dependent on Arabian oil. Our oil now comes from a broad range of countries: from Norway to Iran, from Russia to Nigeria (see Figure 1). The geographical spread of its oil suppliers makes the Netherlands less vulnerable for incidental disruptions in the oil supply from a specific country. The supply of oil from the Middle East and North Africa mainly comes from countries where there is presently no political unrest.
Oil prices
The increase in oil prices is hitting the Dutch economy, however. Since mid-2010, the oil price in euro has risen by 40%; the increase is sharper in dollars (70%) because of the depreciation of the US currency. Oil prices began to climb in the middle of last year, as the improved prospects for economic recovery gave rise to expectations of growing demand. As of January this year, the political unrest in several countries in the Middle East and North Africa pushed prices up further. The earthquake in Japan, which must now import more oil because of the problems with its nuclear power plants, sent prices higher again. However, over the past few days, oil prices have plummeted.
There are two reasons why a surge in oil prices is unwelcome. Firstly, it fuels inflation. Producers face higher production costs, which they will try to pass on in their prices. The danger is that second-round effects may arise, because higher prices may prompt higher wage demands. Secondly, a higher oil price does not help economic growth in countries that depend on oil imports. As our country is strongly dependent on world trade – which is closely linked to the growth of the global economy – the higher oil price may also impair economic growth in the Netherlands.
Exports
Dutch trade is not badly hit by the unrest in the Middle East and North Africa. Exports to this region account for 3% of total Dutch exports, yielding EUR 12 billion annually: EUR 9.5 billion is earned on exports of goods such as machines, chemical products and food products. Notably the countries where political unrest prevails are of only marginal significance for Dutch exports (see Figure 2). The Netherlands exports no more than EUR 0.3 billion to Libya and the same amount to Tunisia. Egypt is a somewhat larger sales market: Dutch enterprises sell EUR 1.3 billion in goods and services to that country. The main customers for Dutch goods in this part of the world are the more stable countries such as the United Arab Emirates, Saudi Arabia and Israel.
Major importing countries for Dutch enterprises are mainly those that export oil. Imports from Saudi Arabia are worth EUR 3 billion. For the Netherlands, Libya is the eight importing country in this region, at over EUR 0.5 billion.
Import
Dutch imports of goods and services from the Middle East and North Africa amount to EUR 14 billion. Crude oil is the most important import product: the Netherlands imports some EUR 8 billion in oil from this region. We also import chemical products and agricultural products. In this respect, too, imports from countries now experiencing political unrest are moderate.
