On the back of Oman’s proactive policies, the positive trend on the oil market augurs well for the economy that is striving to recover from the COVID-19 shock and drop in revenues.
The price of Oman’s crude oil benchmark, the Oman Crude Futures Contract, reached $50.70 per barrel for the first time in nine months on Monday since the breakout of the pandemic.
According to Dubai Mercantile Exchange, the price of Oman’s oil for delivery witnessed an increase of 13 cents compared to last Friday’s price of $ 50.57.
On the global market, Brent crude futures for February rose 67 cents, or 1.3 per cent, to $50.64 a barrel, while US West Texas Intermediate crude futures for January were up 62 cents, or 1.3 per cent, at $47.19 a barrel.
With Monday’s rise, which experts say, resulted from the hopes that a rollout of coronavirus vaccines will lift global fuel demand, the monthly average price of Omani crude for delivery next January amounted to $43.83 per barrel, up by $2.22, compared to the current December 2020 delivery price.
The Sultanate’s 2020 budget has been set on assumed average oil price at $58 per barrel and projected fiscal deficit at RO2.500 billion, lower by 4.7 per cent over actual in 2019. For the first ten months of 2020, the Omani oil price has averaged only $46.0 per barrel which is lower by 28.2 per cent over the corresponding period of last year.
At the same time, public spending amounted to RO3 billion in the second quarter of 2020, while revenues amounted to RO2.2 billion during the period. Net oil revenues decreased by 19.6 per cent during the same period, gas revenues decreased by 22 per cent, and other non-oil revenues fell by 24.4 per cent.
“The revenues have been hit significantly as a result of the pandemic that has plunged the global market with serious fiscal implications on the economy. The current rise in the oil prices coupled with the proactive policies being followed by the Omani government will slowly put the economy back on track”, said Jose Chacko, a financial expert.
Oman’s nominal GDP declined by 13.4 per cent during the second quarter of 2020 compared to the same period of last year, according to preliminary data released by National Center for Statistics and Information (NCSI).
According to the monthly bulletin by the Central Bank of Oman, the nominal contraction in the economy was driven by a 20.0 per cent decline in the hydrocarbon sector, as well as the decline on non-hydrocarbon sector by 9.9 per cent during the second quarter of 2020.
Moreover, the average daily oil production decreased by 1.9 per cent to 952.1 thousand barrels during this period.
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