BAKU, Azerbaijan, June 24
By Leman Zeynalova – Trend:
Average petroleum spot prices per barrel are estimated at $36.20 in 2020 and $37.50 in 2021, Trend reports with reference to the World Economic Outlook of the International Monetary Fund (IMF).
Oil futures curves indicate that prices are expected to increase thereafter toward $46, still about 25 percent below the 2019 average, said IMF.
“Stability in the oil market has also helped lift sentiment. West Texas Intermediate oil futures, which in April had sunk deep into negative territory for contracts expiring in the early summer, have risen in recent weeks to trade in a stable range close to the current spot price,” the report reads.
IMF believes that low oil prices also present an opportunity to reduce harmful fuel subsidies.
This is while in its April report IMF predicted average annual prices of $34.80 a barrel in 2020—a decrease of 43.3 percent from the 2019 average—and $36.40 a barrel in 2021.
The organization believes that the headline deficit for low-income developing countries is projected to widen to 6 percent of GDP in 2020, 2 percentage points higher than last year, and much higher for oil exporters.
For the first time, all regions are projected to experience negative growth in 2020. There are, however, substantial differences across individual economies, reflecting the evolution of the pandemic and the effectiveness of containment strategies; variation in economic structure (for example, dependence on severely affected sectors, such as tourism and oil); reliance on external financial flows, including remittances; and pre-crisis growth trends. In China, where the recovery from the sharp contraction in the first quarter is underway, growth is projected at 1.0 percent in 2020, supported in part by policy stimulus. India’s economy is projected to contract by 4.5 percent following a longer period of lockdown and slower recovery than anticipated in April. In Latin America, where most countries are still struggling to contain infections, the two largest economies, Brazil and Mexico, are projected to contract by 9.1 and 10.5 percent, respectively, in 2020. The disruptions due to the pandemic, as well as significantly lower disposable income for oil exporters after the dramatic fuel price decline, imply sharp recessions in Russia (–6.6 percent), Saudi Arabia (–6.8 percent), and Nigeria (–5.4 percent), while South Africa’s performance (–8.0 percent) will be severely affected by the health crisis.
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