Global factors push down prices of Oman crude oil

MUSCAT: Oman’s crude oil price declined by close to 10 per cent from $34.79 on Friday to $31.38 on Monday, a fall of $3.41.

“The average price of Oman oil (March Delivery 2020) has stabilised at $64.89, thus 60 cents per barrel lower than February Delivery 2020,” Dubai Mercantile Exchange said in a statement.

Dr Saleh Masan, a renowned Omani academic and researcher in GCC economies, said in a statement to Al Shabiba, “The global reduction in oil prices will lead to challenges and harsh financial scenarios for the Gulf Cooperation Council (GCC) states and will also increase their public debts.”

“This will also affect the reserves of GCC states and impact the economic growth of these economies. It will also lead the governments of these states to apply higher income taxes,” he further added.

The current state of chaos in the oil markets and the recession in the world economy due to the outbreak of the coronavirus (COVID-19) may accelerate the state of bankruptcy in some countries due to decrease in oil revenues and the absence of any other alternative sources of income, he said.

To avoid further collapse in the prices the policy decision makers in Organisation of Petroleum Exporting Countries (OPEC) and its allies (OPEC Plus) have the situation under their control, he said, stressing the importance of negotiations to immediately stabilise the oil market.

He also added that the demand for oil would grow by 1 per cent to 1.3 per cent annually up to 2040, according to estimates of the International Energy Agency (IEA) based on the current growth of the world economy.

The collapse in oil prices is attributed to economic and political factors, however, in our current situation, the economic factors are more important, he explained, adding that the outbreak of COVID-19 has negatively affected the world economy and hence led to contraction in demand for oil. “This has led to a reduction in oil price from $60 to $40, which will negatively affect all oil producers,” he concluded.