New record for oil fund – E24

The rise in stock exchanges and the weak krone contribute to achieving a new record in the value of the oil fund at more than 15.700 billion Norwegian kroner.

Informal the counter On the Fund’s website, such high numbers have never appeared before.

On Tuesday morning, the value reached NOK 15.703 billion. The Oil Fund confirms to E24 that it is a record level.

Since the new year alone, the oil fund has increased by just over a quarter. The value at the end of the year amounted to NOK 12.429 billion.

So far this year, the value has exceeded NOK 13,000 billion, NOK 14,000 billion and NOK 15,000 billion.

In June, the value of the fund was almost as high as it is now. It then reached around NOK 15,500 billion, before falling again.

The value of the Fund fluctuates in line with movements in the stock and currency markets, and can vary significantly from day to day.

This affects the value

The krone value of the fund is particularly affected by three factors:

• – The development of the value of the fund’s shares, interest-bearing securities, property and infrastructure
• Development in the krone exchange rate: A weaker krone will increase the value of the fund measured in krone, while a stronger krone will weaken the value.
• How much oil money does the government have left to save in the fund, or perhaps withdraw from the fund?

The oil fund achieved strong returns in the first half of the year, but suffered a decline in the third quarter. At the beginning of the fourth quarter, the fund rose a lot, among other things, after the weak krone and the rise of stock exchanges.

The broad S&P 500 index in the United States fell somewhat during the fall, but has risen again recently.

The krone’s exchange rate against major currencies has fallen since this summer. One dollar was worth less than ten kroner this summer, but now it is worth 11.11 kroner. One euro was worth about 11.12 Norwegian krone this summer, but is now worth about 11.86 Norwegian krone.

In addition, the state has transferred more than NOK 500 billion to the fund during 2023. These are oil and gas revenues that are not used in the state budget and can therefore be saved in the fund.

He warned of a possible fall

The Oil Fund repeatedly stressed that the value of the fund could decline by 40 percent if the global economy develops in an unfavorable way.

In such a case, the fund will suddenly fall below 10,000 billion again.

The government will then have $280 billion available for its annual use of oil money, given that it has followed the business rule set SurfaceSurfaceNorway’s governments apply a self-imposed rule that the annual use of oil funds over time should be limited to three percent of the value of the oil fund. This is often referred to as the action rule. To spend three percent of the fund’s value.

The Oil Fund has grown significantly in recent years, which has made it possible to significantly increase the use of oil funds. The government plans to use NOK 373 billion from the fund until next year.

– Claim

The government acknowledged that any decline in the value of the fund may be difficult to deal with.

“There is significant uncertainty about the further development of the value of the Fund, and fiscal policy must take into account the fact that there is a risk of a significant decline in the value of the Fund,” the government wrote in its report. National budget For the year 2024.

The government added, “The share of state budget expenditures financed by the Fund has reached a high level, which may make it difficult to adjust the use of oil funds if the value of the Fund decreases significantly.”

The government believes that the era of increased use of oil money is also over. In the 2024 budget, it notes that there is “clearly less room” to increase the use of oil money in the coming years than in the past 20 years.