The global economy is expected to return to growth in 2021, yet oil prices will remain below pre-Covid-19 crisis levels for several years ahead, according to Fitch Solutions.<\/p>\n
In its outlook insights for the global oil market amid the Covid-19 crisis, shared with Ahram Online, Fitch Solutions forecast that Brent prices will only average $51\/bbl in 2021, adding that prices will probably pick up gradually, but will remain below the 2010-2014 average until 2029.<\/p>\n
As a result, Fitch Solutions expects that the fiscal positions of emerging market (EM) governments that are dependent on oil revenues will deteriorate over the coming years, adding that oil prices will remain below the break-even level that major producers in the Middle East and North Africa (MENA) region need to balance their budgets.<\/p>\n
In this regard, Fitch said that this situation will require structural changes to fiscal and budget management, which could be hard to implement in the short term. On the other hand, Fitch expects that the prolonged period of low oil prices would force governments in the Gulf and elsewhere to accelerate their efforts to raise more tax revenue from the non-oil sector. Accordingly, Fitch expects Gulf States\u2019 debt to rise sharply over the coming decade.<\/p>\n
Meanwhile, global oil consumption is expected to accelerate in 2021 by 3.7 percent as the economy rebounds, according to Fitch Solutions. Yet, Fitch expects that the growth of global demand will slow, falling to less than 0.8 percent per year by the end of the decade \u2014 half the rate recorded between 2010 and 2018.<\/p>\n
\u201cThis slowing of demand growth will be driven by a gradual transition towards less carbon-intensive fuels. This process will probably accelerate over the following decades. Even if environmental policies and consumer trends remain unchanged, it is estimated that the world will consume 8.6 percent less oil in 2050 than it did in 2018. Under the firm\u2019s alternate scenarios, demand could fall by between 50 percent and 80 percent by 2050,\u201d Fitch said.<\/p>\n
According to Fitch forecasts, Gulf States are among the few EM oil exporters that will not witness production growth over the coming decade, while the production decline will probably be steepest in Africa, particularly in Algeria, Angola and Chad.<\/p>\n
The gradual decline of the oil sector, as a driver of economic growth, will not be a major problem if governments manage to diversify their economies and build up new growth engines, according to Fitch.<\/p>\n","protected":false},"excerpt":{"rendered":"
The global economy is expected to return to growth in 2021, yet oil prices will remain below pre-Covid-19 crisis levels for several years ahead, according to Fitch Solutions.<\/p>\n","protected":false},"author":4,"featured_media":320151,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[23],"tags":[120],"class_list":["post-320251","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-markets","tag-oil-prices"],"yoast_head":"\n