The historic increase in the price of oil recorded after the drone attack on a Saudi refinery has already become a new threat to the Spanish economy and, even more so, to the pocket of millions of drivers. The cost of the barrel of Brent used as a reference in Europe increased during the day yesterday more than 10% after starring in the first seconds of trading its biggest rise in history (more than 20%). In just a few seconds after the reopening of financial markets on Monday, a barrel went from $ 60 to $ 71, but later moderated in the afternoon to $ 66.

This increase represents a terrible news for Spain if it continues over time, as the vast majority of analysts anticipate. The missiles directed against a crude processing center of the state oil company Aramco have left the world without 5% of its current oil supply, which has led to an immediate readjustment via prices. But this is only the first effect, as uncertainty persists about the future of the conflict over the resurgence of tensions in a region that hosts half of the world's reserves of this raw material.

The rise in oil prices breaks with the respite that had taken place this year and that had allowed Spain to increase its purchases of crude oil abroad by paying less. Between January and June of this year, the country has spent 17.611 million euros in bringing oil from different parts of the world, among which Nigeria, Mexico and the now attacked Saudi Arabia stand out in this order. 12% of the crude oil consumed in Spain comes from the Arab country. The total oil bill is equivalent to around 2,935 million euros per month, 5% less than the 3,091 million spent last year, although the pace of purchases has increased 2.4%, to 2.8 million tons per month.

This situation had helped contain the country's deficit energy trade balance, one of its great economic burdens due to low indigenous production and high external dependence. Only the previous year, the oil deficit amounted to 15,892 million euros, more than one tenth of GDP, with an annual price of a barrel of oil close to $ 71. This year is trading at an average of $ 66, despite the sharp rise yesterday.

Apart from the macroeconomic impact, the second big blow of the new increase in crude will be taken by drivers who have to refuel in the coming weeks. Parallel to the rise in the cost of a barrel of oil, the attack on the Saudi refinery also triggered the market price of gasoline and diesel futures consumed in Europe. Yesterday, the price of both rose almost 9%, which will have an impact of approximately 4% on the final cost of both fuels.

The increase also puts pressure on the economic forecasts made by the Government last April, made with an oil price of $ 68.9 per barrel. The current price is still below that figure, but the margin of eight dollars on Friday has been reduced to a quarter.

Economic brake

The rise in oil coincides with a wave of downward revisions of forecasts of GDP growth for this year by analysts. Funcas' panel of experts announced yesterday a one-tenth cut in the estimate made in July to place it at 2.2%. Pessimism has spread among the analysts that make up the picture. Ten of the panelists have opted in recent months to lower their forecast of GDP growth for this year, while none of them has made upward changes.

The most striking aspect of the table published by the entity is that it increases by one tenth the contribution of the foreign sector to economic growth due to the fall in imports, while the flat tire is already located in domestic demand.

“The forecast for both private consumption and public consumption is reduced by one tenth, but above all the downward revision in six tenths of investment in fixed capital and, especially, in machinery and capital goods, which is highlighted it has cut by 1.2 percentage points up to 3.3%, ”according to the latest report. These data are based on the puncture of industrial activity, which has suffered its worst records this summer since the last recession.

Looking ahead to 2020, analysts maintain their 1.9% growth bet, but believe that the slowdown will be advanced and will be more intense in the second quarter of the year, with a quarter-to-quarter GDP growth of 0.4%.

The cooling of the economy will be transferred to the labor market. "The average annual unemployment rate will continue to decrease to 13.9% in 2019, and 12.9% in 2020, although with a slight increase compared to the previous consensus forecast," says Funcas. It is, in particular, two more tenths of unemployment compared to the previous calculation. The current growth forecast is in line with that made last April by the Ministry of Economy and below the projections of the Bank of Spain, European Commission and International Monetary Fund (IMF).

Repsol, Intermoney and CEOE are the most pessimistic entities on the behavior of the economy with growth forecasts of 2.1%. On the other hand, Asexor and Equipo Economico are the most optimistic, by betting on a 2.4% increase in GDP this year.

“In the absence of structural measures, this inertia is slowing down, and that is a shame, because to the extent that we have maintained growth rates well above 0.5% quarterly, we have been able, in Spain, to reduce the unemployment rate very aggressively and that is already slowing down, ”warns Jorge Sicilia, chief economist at BBVA.

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