30 April 2020
China bouncing back extremely quickly in all sectors is a positive sign for the global economy and it will go a long way in preventing further decline in oil prices, a leading energy economist said on Wednesday.
Delivering an E-Lecture – Oil Markets in the Post-Pandemic World – organised by Abu Dhabi-based Trends Research & Advisory, Mamdouh G. Salameh, visiting professor at the ESCP Europe Business School, said that this will give a huge impetus to an oil market bereft of good news and may also prevent oil prices from sliding further downward.
“The impact of coronavirus on the global economy has been far bigger than the financial crisis of 2008 and the 2014 oil price crisis. There are indications that the adverse impact could be even bigger than the Great Depression of the 1930s,” he said.
Dr. Salameh said that the year 2020 started with positive projections that the global economy is set to grow at 3.3 per cent with global oil demand adding 1.2 million barrels a day over 2019, which was not to be. He also said that the Covid-19 pandemic will accelerate the process of diversification of economies in the region.
“The outbreak has changed everything. The world has never faced such a lethal and destructive cocktail of a pandemic outbreak, global recession and a huge glut in the global oil markets, and an oil price war in the last 90 years,” he said.
According to Dr. Salameh, “We are heading into a years-long recession that will have far-reaching consequences some of which we can predict with certainty while others will be entirely unpredictable.”
Dr. Salameh pointed toward the IMF projection of a 3 per cent slump in the global GDP, from a projected 3.3 per cent due to the coronavirus and the resulting lockdown. He, however, said that the IMF is “basing its projection on an assumption that the pandemic fades in the second half of this year and that containment measures can be gradually wound down.”
Dr. Salameh said that estimates of the damage on the global oil demand vary but there is overwhelming agreement that the glut has mushroomed to an estimated 1.8 billion barrels between globally stored oil and excess oil in the market.
“The global oil demand has declined by an estimated 30 million barrels a day with oil prices crashing to mid-20s,” he said, adding that, globally, the double supply-demand shock of the coronavirus in the oil market could lead to companies deferring as much as $131 billion worth of oil and gas projects slated for approval this year.
The lecture was part of a series of E-Lectures organised by Trends Research & Advisory during the month of Ramadan will shed the spotlight on lessons, challenges, and opportunities arising out of the Covid-19 crisis and its global impact. Leading experts from around the world will share their views and analyses on a virtual platform as part of the Center’s Strategic Dialogue E-Forum, which is central to its mission to produce cutting edge research that helps decision-makers, better understand the challenges of the future.
The E-Lecture session was moderated by Mahmood Mohammed Sharif, Director, Economic Studies Department at the Trends Research & Advisory. Speaking at the end of the lecture, “Sharif said that in times of crises, all oil-producing countries – including the US, Russia, Saudi Arabia, and the UAE – need to work collectively to uplift the global economy”. He also emphasised the importance and central role of Saudi Arabia in the oil industry. As part of the series to analyse the impact of Covid-19 on various spheres of the global economy, Trends Research & Advisory is also organising an E-Discussion – Artificial Intelligence and Combating Pandemic Covid-19 – which will be live-streamed on May 6. Dr. Munier Nazzal (MD, MBA, FRCS, FACS), Head of Vascular Surgery and Endovascular Surgery Division at the University of Toledo Medical Centre, US, and Dr. Sapan Desai (MD, Ph.D., MBA, FACS), CEO of the Surgisphere Corporation, will address this session.
On May 12, Mariam Al-Qubaisi, the Director of Media and Communication Department at the UAE’s National Emergency Crisis and Disaster Management Authority (NCEMA), and Dr. Victor Cha, Senior Adviser and Korea Chair at the Cenrer for Strategic and International Studies (CSIS) will deliver another e-lecture on the best international practices in tackling Covid-19.
The series of E-Lectures follows an E-Symposium organised by Trends Research & Advisory on March 31, which witnessed the participation of experts from around the world.
The E-Symposium – Confronting the Challenges of COVID-19: A New Global Outlook – was the first online symposium of its kind since the outbreak of Covid-19 in the Gulf and Middle East region.