KUWAIT, March 31 (KUNA) — The world economy is likely to recover within six months’ time, with oil prices bouncing back to USD 40 a barrel by the end of the second quarter of this year, two Kuwaiti experts suggest.
The fact that oil prices still stand at USD 25 a barrel in spite of the novel coronavirus pandemic gives some hope that the global economy could recover within six months’ time, opined Hajaj Bukhdour in remarks to KUNA.
He underlined that the 18-year low of oil prices on Monday is unquestionably due to the fallout of the globally spreading virus and relevant global measures to curb it.
However, he pointed out growing concerns that the anti-virus measures could last several months and, thence, the low oil demand would continue unabated.
The world oil markets have been particularly hard hit by massive movement restrictions and closure of plants worldwide, thus lowering both price and demand, Bukhdour lamented.
Ahmad Karam, also a Kuwaiti oil expert, said OPEC and non-OPEC producers need to come up with concrete decisions that could put things straight and restore market equilibrium.
Echoing Bukhdour’s views, Karam told KUNA that the ongoing slump in oil prices was mainly attributed to world governments’ strict measures and precautions in a bid to mitigate the ramifications of the novel coronavirus (COVID-19).
He hoped that coronavirus treatments or vaccines could be developed in the near future in order to rebalance the world oil market.
Global oil prices slumped to fresh 18-year lows Monday, pulling US crude under USD 20 a barrel in early European trading amid growing production rates and a coronavirus-led collapse in world demand.
The pandemic has halted economic activity and global travel, resulting in a historic drop in oil demand.
The International Energy Agency (IEA) said in a recent report that the global demand for oil was set to decline significantly in the current year due to the impact of COVID-19 on the travel and world economic activity.
The IEA evaluated the drop in demand at 90,000 barrels per day (b/d) compared with 2019 levels and this would put global demand just below 100 mbpd, reaching an average of 99.9 mbpd this year. It is the first time in 11 years; including the financial crisis in 2008 that such a demand drop is occurring.
But, the IEA report warned that the situation is still evolving and the full impact on markets will not be known for some time.
The IEA said it had developed two scenarios to try to forecast the impact of coronavirus on oil demand. In the case the virus is contained quickly, demand could resume and reach 480,000 b/d, but still down on 2019 overall levels.