On the back of a tightening market outlook, Oman crude oil price on Dubai Mercantile Exchange (DME) reached its highest in 12 months on Monday.
According to a statement from DME, the official price of Oman oil on DME, for delivery next April reached $59.74.
The prices increased by 78 cents compared to last Friday’s price, which amounted to $58.96 making it to the pre-coronavirus pandemic level.
In January, 2020, Oman crude was traded at $62. It came down to $48 in February, and touched $27 in March.
The price of Brent crude is about to breach the important psychological mark of $60, closing the week at $59.34 per barrel. The price of West Texas Intermediate (WTI) crude closed the week at $56.85 per barrel.
“Although the rise is range-bound, it will help in shoring up government revenues and reviving the economy. The continued improvement in the oil price is a positive indicator for the market”, said an official from oil sector.
In the budget 2021, the aggregate public revenue is projected to increase to RO 8.6 billion during the current year, based on assumed oil price of $45 per barrel, up by 2 per cent as compared with the preliminary results of 2020.
The 2021 deficit is estimated at about RO 2.2 billion, which is 8 per cent of gross domestic production (GDP).
A 73 per cent of this deficit will be financed through external and domestic borrowing i.e. RO 1.6 billion, while the rest of the deficit, estimated to nearly RO 600 million, will be covered by drawing on reserves.
While expecting the oil prices to cross the $60 mark in the coming months on the back of successful market management by Opec and other countries, the official said. “A price above $60 is good for Oman”.
Oil prices have experienced a decline in 2020 due to lower oil demand as a result of lockdowns and health measures being taken worldwide to control the spread of Covid-19 pandemic.
The world’s economic activity is anticipated to recover gradually in 2021, leading to improved global oil demand and better oil prices.
By the end of the second quarter of 2020, the Sultanate’s GDP experienced a decline by 13.4 per cent at current prices, recording RO 12.3 billion compared to RO 14.1 billion over the same period in 2019, according to National Centre for Statistics and Information (NCSI).
This decline is driven by a reduction in the value added of oil activities by 20 per cent, registering RO 4.1 billion by the end of second quarter of 2020. In addition to a decline in the value added of non-oil activities by 9.9 per cent, recording RO 8.7 billion.