Oil Declines, but Doesn't Help European Consumers

As U.S. and European markets have tumbled in the last month, oil prices have also posted double-digit declines, but the slide isn't helping consumers in the euro zone.

Henrik Weis | Lifesize | Getty Images

"They're really getting hit with a one-two punch," says John Kilduff, founder of Again Capital and a CNBC contributor.

At a time when the euro zone is in economic and financial turmoil, fuel prices in the region are near all-time-highs, close to levels not seen since the height of the financial crisis in 2008.

While the markets have been preoccupied calculating the probability that Greece will exit the euro zone, it is the dramatic move in currencies that has been the main culprit for the high cost of fuel in Europe.

As the euro has crumbled to a 23-month low, the dollar index has risen sharply to its highest level since September 2010. The U.S. dollar's strength has pressured oil and other dollar-denominated commodities.

The global benchmark for oil prices (Brent crude) and its U.S. counterpart (the NYMEX WTI oil contract) have fallen 15 percent or more from their peaks earlier this year.

"This strong decline in prices won't do much for the European consumer," says Petromatrix oil analyst Olivier Jakob. "The increase of the dollar index is to a large part offsetting the lower oil prices in dollars."

Yet, oil priced in the euro zone currency — Brent crude priced in euros — has fallen only half as much as the dollar-denominated Brent crude contract in the last month.

Unfortunately, European consumers, who need lower fuel prices the most, aren't getting those prices right now, Jakob says. As high energy prices often precede economic downturns, some analysts say, fuel costs in the euro zone may further nudge the region off a precipice.

Follow Sharon on Twitter: @sharon_epperson