If current coronavirus-affected oil markets remain in today's price range, oil and gas revenues in vulnerable developing countries are expected to fall by up to 85% in 2020, Caspian Energy reports with reference to the joint statement of the International Energy Agency (IEA) and Organization of Petroleum Exporting countries (OPEC).
Executive Director (IEA) Fatih Birol and OPEC Secretary General Mohammad Sanusi Barkindo held a phone discussion about the impact of the serious global healthcare crisis caused by coronavirus (COVID-19) on the stability of the economy and markets in developing countries.
Pointing to the risks inherent in fast-moving dynamics, including the most recent developments in global oil markets, the two leaders agreed that citizens of developing countries and those who depend heavily on oil and gas revenues for basic services are particularly vulnerable to market volatility.
Analyzing the impact on vulnerable developing countries, Birol and Barkindo noted that "if current market conditions persist, their oil and gas revenues will fall by 50-85% in 2020, reaching the lowest levels in the past two decades, according to a recent IEA analysis”.
The coronavirus pandemic is causing weak global oil consumption and low economic activity worldwide. Saudi Arabia-led OPEC and non-OPEC member Russia failed to agree on a deal during their last meeting on March 6 to ensure deeper cuts in oil production levels.
The following Friday, March 13, crude oil prices recorded weekly losses reaching almost 20%, and recorded the largest weekly decline in 29 years due to low demand associated with coronavirus and combined with the risk of an increase in oversupply.
What is even worse, Saudi Arabia and Russia are preparing to increase their oil production levels in April - a move that should increase the supply glut and put further pressure on prices.
This also happens simultaneously with the cancellation of the meeting of the joint technical Committee (JTC) of OPEC and non-OPEC countries, which was supposed to be held on March 18.
Birol and Barkindo said the situation could have serious social and economic consequences, especially for public sector expenditures in vital areas such as health and education.
They both stressed the importance of finding ways to minimize the impact of the current situation on vulnerable developing countries. They agreed to maintain close contact on this issue and continue regular consultations on the development of the oil market.
