(4 minutes read)
· The spread effect of the oil price decline will have its
impact in the oil producing countries in Africa, which is betting on a
quick oil price recovery for its economic growth
· The spread effect of the oil price decline will have its
impact in the oil producing countries in Africa, which is betting on a
quick oil price recovery for its economic growth
US oil prices dived to 21-year lows on Monday and has taken a deep
hair cut of 30%. The spread effect of the oil price decline will
have its impact in the oil producing countries in Africa, which is
betting on a quick oil price recovery for its economic growth.
Amidst the gloomy scene across the oil producing countries, today the
US oil prices have recovered to some extent, giving a glimmer of hope.
Yet, there is no clear indication that the price recovery is
sustainable since the news coming from two major oil consuming
countries –Chin and India-is not encouraging. Reports indicate that
the Chinese economy has slowed down for the present quarter by 6.8%, a
massive decline, as compared to the quarter a year ago. India’s
growth earlier estimated at 5.5% is now pegged at 1.9% on an
annualized basis. There are reports that it may further slide
depending on the timeframe the world gets over from the sinister
impact of Covid-19, which is variously estimated ranging from six
months to a couple of years.
The oil producing countries in Africa are in for a double whammy.
Based on the historical decision by Russia and OPEC plus countries,
all oil producing countries have cut back the production in
anticipation of balancing it with the demand. Yet, the demand failed
to pick up since the production facilities across the world are still
in a lockdown condition. The re-opening of Wuhan was a good indication
for the oil demand to surge. But the relapse of the pandemic, though
in a limited way in the province, has eclipsed the hopes of a speedy
recovery of China. In India also, the situation is far from optimistic
since the lockdown continues and a speedy normalcy in most of the
states, where production facilities are concentrated seems to be
remote going by the number of Covid-19 cases still being reported.
That would force African countries like Nigeria, Angola etc to re-look
at their development agenda and recalibrate the benchmarks.
