by James Ikenna…...
OPEC has predicted that oil prices may recover faster than expected post coronavirus pandemic. This is predicated among other things the OPEC+ production cuts and gradual lifting of lockdowns around the world in the second half of this year 2020.
Mohamed Arkab, Energy Minister of OPEC’s rotating president Algeria, is predicting that oil prices will be $40 starting from the third quarter of this year.
According to OPEC the global economy will not stay paralyzed for too long. “Together with the 9.7 million bpd cuts, OPEC and its allies pledged for May and June, these factors are set to lift the price of oil in H2 2020” Arkab said.
In China, which was hit first by the coronavirus, and which exited the lockdown first, the return to normalization in the transportation sector “is driving up global demand,” according to Algeria’s energy minister.
Just a few days before the OPEC+ deal enters into force, oil prices crashed as the market continues to see the imminent storage shortage problem as a bigger factor for prices than the potential effect of the OPEC+ cuts and the potential easing of the lockdown measures.
Last week, OPEC’s fourth-largest producer, Kuwait, said it had already started to reduce oil supply to international markets ahead of May 1, “sensing a responsibility responding to market conditions.” he said.