International Monetary Fund sees Oil Prices going Up

Oil prices are not expected to soar sharply over the next year and stay in the $ 40- $ 50 per barrel range, putting additional pressure on Middle East oil exporters, the International Monetary Fund (IMF) said in its update on Monday regional economic outlook for the Middle East and Central Asia. The gross domestic product in the region will fall by 4.1 percent this year, which corresponds to a downward revision of 1.3 percentage points compared to the IMF forecast of April 2020.

According to the IMF, the economies of oil exporters in the Middle East and North Africa are expected to suffer more this year, shrinking by 6.6 percent. The six Gulf Cooperation Council (GCC) countries - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates (UAE) - will see their economies shrink 6.0 percent in 2020, before shrinking 2.3 percent in 2021 Percent will rise. Saudi Arabia's economy contracted 7 percent in the second quarter, with the unemployment rate hitting a record high as the combined impact of the plunge in oil prices and the coronavirus pandemic hit the world's largest oil exporter hard.

The muted prospects for a global recovery and subdued oil prices will continue to put pressure on the balance of payments of oil exporters in the Middle East, according to the IMF. Downside risks remain prevalent and cloud the outlook, the fund added. "Over the short and medium term, oversupply and inventory levels remain worrying, while low air traffic continues to dampen demand (despite a recovery in road traffic).

Oil futures curves suggest that prices are likely to rise towards $ 48 a barrel over the medium term ( of $ 41 for 2020) and will thus remain about 25 percent below the 2019 average, "stated the IMF. "Projections for oil prices are in the corridor between $ 40 and $ 45 for ... early next year and will average between $ 40 and $ 50 in 2021," said Jihad Azour, director of the IMF's Middle East and Middle East division Central Asia, opposite CNBC on Monday. The fiscal break-even price in Saudi Arabia, for example, is estimated by the fund for 2020 to be $ 78.20 per barrel.