‘The worst is behind us’ after global oil price rally
The price of Omani crude oil (futures) crossed $75 per barrel on the Dubai Mercantile Exchange (DME) on Tuesday morning, marking a three-year high since oil prices began falling three years ago.
According to DME, the price of oil for Oman’s July 2018 delivery rose to reach $75.41.
Experts are confident the rise in the price of oil will provide a welcome boost to the economy.
“The worst is behind us,” said Fabio Scacciavillani, Chief Strategy Officer for the Oman Investment Fund. “The rebound in oil price was gaining momentum and this momentum was strengthened even more in 2018.”
He added, “Considering Oman relies heavily on the oil price, being one of the large oil producing countries, we can look to the future with much more confidence; the emergency we faced two-and-half years ago is gone.”
“Now, we have to work to strengthen this rebound and make the Oman economy more resilient, robust, give opportunities to more young people to manage the economy in a way that could bring about more positive results in the near future,” Scacciavillani said.
Saleh Masan, Chairman of the Economic Committee of the Shura Council, shared Scacciavillani’s enthusiasm.
He told the Times of Oman in an exclusive interview, “We know that the national deficit will dip because the budget was built on the price of $50 and we have already reached $75; this price could continue to increase until the end of this year, which will lead to our deficit being wiped out.”
Masan also detailed the cause of the oil’s upward trajectory, pointing to the recent decision of the United States to withdraw from the Iran Nuclear deal as a likely catalyst.
“Firstly, oil prices are generally affected by a number of factors, there are economic factors and even geopolitical factors. The main reason for the current increase in oil prices is due to geopolitics. As a result of the uncertainty and instability of the Middle Eastern region, specifically the United States’ decision to withdraw from the Iran nuclear deal, this increased the level of danger in the region, which raised the level of uncertainty in oil supplies available which contributed to the rise in oil prices,” said Masan.
“Secondly, if the current factors continue, the price of oil will continue to increase during the upcoming period,” he added. “Thirdly, as it stands, the price of oil is approaching the price of oil equivalent to the state budget.”
He said, “I hope these rises do not change the government spending plan and that it continues to maintain financial discipline.”
The growing price of oil is expected to have a long-term impact on investor confidence as well.
Lateef Shahdad, General Manager of Mass International, said, “People right now are largely looking forward to what will happen in the future. Because 72% of the economy is dependent on oil, when there is a large increase in the oil price, the confidence of investors grows higher and higher.”