KUWAIT: An oil expert yesterday anticipated Kuwait oil prices to increase to $60 per barrel (pb) in second half of this year as the world is projected to witness stability following coronavirus pandemic with provision of vaccines thus return of normal life. Mohammad Al-Shatti, addressing a virtual seminar about horizons of global economy and crude oil prices for 2021 organized by Kuwait’s Oil Ministry, said return of normal aviation operations would also help improve prices. He said prices between $70-80 pb were “relatively desirable” for the Arabian Gulf countries and achieve some balances in their budgets.
Improvement of oil prices, added Shatti, would primarily benefit the budgets of Arab Gulf countries which largely depend on oil as a major source of income. He therefore called for diversification of income and execution of immediate reforms because oil prices were affected by global political and health conditions. Shatti anticipated global economy to recover by over four percent in the second half of 2021, triggered by availability of COVID-19 vaccines.
Recovery of economy, he added, would encourage return of oil and gas investment coupled with optimism driven by a new US Administration. Initial estimates show that global oil stocks dropped by two million barrels per day (bpd) in December 2020, however it remained 11 percent higher than 2019, he said. “That is why the decision by OPEC+ and the Saudi initiative for further (production) cuts were key in creating positive atmospheres in oil markets,” he said.
The future of oil markets will depend on reaching an effective COVID-19 cure by mid-2021, recovery of economy by over four percent, an increase of industrial and economic operations, commitment of OPEC+ in markets’ stability and continuous drop of oil stocks, he said, which would transform the surplus into a deficit thus pushing prices to $60 pb. Shatti added wide-spread use of COVID-19 vaccine would encourage recovery of aviation sector thus push prices to around $70 pb.
However, he warned that spread of coronavirus and failure by OPEC+ to abide by commitment would cause a constraint on oil prices to go down to $45 pb. Sheikha Tamadher Khaled Al-Sabah, Director of Kuwait Oil Ministry’s Public Relations Department, commended by saying that Saudi Arabia’s decision to cut one million bpd in February and March as a “good gesture” to restore prices. She said provision of vaccines and the US stimulus packages would also improve prices. – KUNA