Advisor to Al-Sudani: Low oil prices require caution and economic preparedness in Iraq
Advisor to Al-Sudani: Low oil prices require caution and economic preparedness in Iraq
2024/08/07
A financial advisor to the Prime Minister, Mohammed Shia Al-Sudani, warned of the effects of the decline in oil prices in the global market on Iraq, which depends on oil revenues for more than 90% of its resources.
Oil prices have fallen to $76 a few days ago.
Mazhar Mohammed Saleh told Al Furat News Agency, “There has been a gradual decline in global oil prices for the past few days, as this decline coincides with the decline in the value of financial assets in the American and Japanese markets, especially the decline in the benchmark oil (Brent crude), which is currently hovering around $76 per barrel for futures contracts after reaching nearly $88 per barrel last June, which requires more caution and economic foresight and what it may have of effects on our country’s financial resources in the coming period.”
He added, “However, there are two possibilities that may limit the deterioration of oil markets to the bottom if they happen. The first is that the continuation of the current international geopolitical tensions in Eurasia, the Middle East and elsewhere will remain a pressure factor that does not allow the deterioration of energy resource prices (oil and gas) in the world, as oil is a strategic material that has priority in demand and storage in the difficult and exceptional circumstances that the Western world is going through. The second is that the two most important economies of major Asia (which contribute to global economic growth, namely China and India) have not been affected by the current economic recession in Western financial markets, which means that opportunities for economic growth still require the sustainability of demand for energy resources, and oil in particular.”
Saleh explained that “even if some parts of the global economy enter a recession or reach a state of depression and extend for the next six months, similar to what happened in 2008 with the financial crisis (the mortgage crisis), the fluctuation of the oil asset cycle towards a decline and the occurrence of a glut in the oil markets may remain a temporary and short-term matter from our point of view.”
He pointed out that “prevailing expectations until recently saw the global oil market as an optimistic market represented by rising prices, especially in light of strategic production adjustments by OPEC+, amid regional and international economic and political developments with varying impacts on global oil demand.”
The government advisor explained that “the US Energy Information Administration had previously announced this year that it expected average prices to reach about $89 per barrel of oil and continue until the end of the year in 2024, which encouraged the US oil market to invest in marginal shale oil fields with high extraction costs.”
alforatnews.iq
