01 Oct 2018
Oman’s economy is expected to stabilise now that the price of oil has risen significantly and is forecast to remain at this level for the foreseeable future – According to information provided by the Times of Oman and Dubai Mercantile Exchange.
A barrel of Omani oil is now worth $80.02, up from $78.04 on the previous day, recording a $1.98 increase in one day. This marks a four-year high for the money oil now brings to Oman and the largest price per barrel since the recent oil glut began in 2015.
Fabio Scacciavillani, Chief Economist of the Oman Investment Fund, said: “The most recent development involving the price of oil happened just a few days ago, during a meeting involving the OPEC nations, and included countries such as Saudi Arabia, where the Saudis said that they would be happy if the price of oil stayed at this level.
“Oil price went up a little, provided it did not go down again. You must understand that this is because the cost of extracting oil is about the same.”
Scacciavillani went on to say: “What this means for smaller oil-producing nations such as Oman is a more stable economy in the future, because the price of oil is expected to stay at this level, and any fluctuations in the price will be very small. This means that the worst days are past us, but people should not imagine that just because that is the case that we can go back to the boom-time again. A lot of the oil extraction contracts were negotiated during the period of the downturn with long-term deals fixed at prices that reflected that market.”
He explained that the price of oil depended on several determining factors.
“Globally, the impact of US sanctions on Iran, as well as the dire situation in Venezuela, both of which are oil-producing nations, have driven up the cost of the price of oil,” he explained. “That and the comfort of the Saudi position for the current oil producing status are some of the main reasons behind the oil prices, because they are among the biggest producers of oil in the world.”
“In addition, the current oil situation is such that the oil fields which are presently producing oil are being depleted, and new ones will take time to come online and start producing enough for the long term. It takes time to verify the exploration and discovery of new oil fields, and once you have found them, it takes 10 to 20 years for the oil field to produce at an optimum rate,” Scacciavillani concluded.