BAKU, Azerbaijan, May 6
By Leman Zeynalova - Trend:
The European Commission has revised down the Brent price forecasts for 2020 and 2021, Trend reports referring to the European Economic Forecast Spring 2020.
The assumptions for Brent prices are revised downwards to an average of 38 USD/bbl in 2020 and 40 USD/bbl in 2021, down by 33 percent and 28 percent, respectively compared to the autumn Forecast. In euro terms, downward revisions as compared to the autumn forecast amount to 32 percent and 27 percent, respectively.
“These developments are expected to further dampen the economic prospects for many oil-exporting countries, in addition to limiting their fiscal space to counter the health shock in a context of exacerbating financial vulnerabilities. On the other hand, potential positive effects from lower oil prices in oil importing countries would be impaired in the nearterm by the depressed demand conditions in view of restrictive public health measures effectively shutting down large parts of their economies,” reads the report.
European Commission recalls that in March a brief price war between Saudi Arabia and Russia prompted a surge in supply leading to an additional sharp plunge in prices.
“Eventually, in April, the OPEC+ countries agreed to curtail oil production in the face of the slump in global demand. However, concerns that the agreed production cuts would be insufficient to cope with the plunging demand, together with scarcity of storage for the excess oil supply, sustained the downward pressure on prices. In an environment of extreme uncertainty around the unfolding COVID-19 pandemic and the growing jitters over the global economic outlook, oil and commodity prices are set to remain subdued over this year and next, well below earlier expectations,” said the Commission.
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