OPEC has predicted that oil prices are set to recover with the OPEC+ production cuts and gradual lifting of lockdowns around the world in the second half of 2020, when oil prices “will be $40 starting from the third quarter,” Mohamed Arkab, Energy Minister of OPEC’s rotating president Algeria, said.
According to OPEC the global economy will not stay paralyzed for too long. “Together with the 9.7 million bpd cuts, OPEC and its allies pledged for May and June, these factors are set to lift the price of oil in H2 2020” Arkab said.
In China, which was hit first by the coronavirus, and which exited the lockdown first, the return to normalization in the transportation sector “is driving up global demand,” according to Algeria’s energy minister.
Just a few days before the OPEC+ deal enters into force, oil prices crashed as the market continues to see the imminent storage shortage problem as a bigger factor for prices than the potential effect of the OPEC+ cuts and the potential easing of the lockdown measures.
Last week, OPEC’s fourth-largest producer, Kuwait, said it had already started to reduce oil supply to international markets ahead of May 1, “sensing a responsibility responding to market conditions.” he said.