Oil prices drop to lowest level since year due to corona

Report by Khaled Al Mutairi KUWAIT Oil prices have dropped to the lowest level since more than a year ago, amid jitters emanating from looming long term fall in demand amid spread of the novel coronavirus.

Dr. Khaled Boodai, chairman of Consulting Center, told KUNA that the markets have been gripped with fears due to the virus spillover to several countries worldwide, leading to sale transactions in the speculations markets and in turn resulted in “pressure on the prices and decline by 20 percent since January.” Long term effects on oil prices hinge on extent of the virus spread and inability to control it, he said, affirming that the demand would further drop if the disease continues to spread in the coming six month.

Nevertheless, there are “significant possibilities: that the virus may be contained in light of international efforts, and this may materialize if the oil prices are re set at US 65 per barrel.

Effects of the epidemic outbreak on China and the whole world have remained largely limited, he added.

Dr. Ahmad Al Kooh, petroleum engineering professor at Kuwait University, said in remarks to KUNA that that the epidemic might affect the global economy, namely oil demand, thus OPEC plus countries might be compelled to extend the production cut deal.

Al Kooh forecast extension of the oil production cut decision until 2020 due to possible economic recession.

He believes that the oil price at USD 60 per barrel has negative effects on the economies of producers. However, Kuwait will not suffer major effects because its budget is based on the oil price at USD 55 pb.

Source: Kuwait News Agency