Oman crude falls below $50/b on global virus fears

MUSCAT, FEB 29 – Oman crude fell below $50 per barrel for the first time in nearly three years in trend with other international benchmarks as global oil markets continue to be roiled by the spread of the deadly coronavirus (COVID-19). The Oman Crude Oil Futures Contract (OQD) slumped to $49.11 per barrel in trading on the Dubai Mercantile Exchange (DME) on Friday, which was down by $1.36 per barrel from the previous day’s marker price. The oil price benchmark has lost almost 30 per cent of its value from this year’s peak of $70.45 a barrel, posted on January 6 this year in the wake of US missile strikes that killed a prominent Iranian general.
But the decline is unlikely to have a significant impact on the Omani economy if the downtrend is temporary and short-term, according to a Muscat-based market expert. “Let’s keep in mind that the average price of Omani crude has been around $63 per barrel during the first two months of this year, which is about $5 per barrel above the assumed price of $58 per barrel computed by the Omani government for the 2020 State Budget. Consequently, the impact for the overall fiscals and financials of the country may not be significant,” said Alkesh Joshi, Partner – EY Oman.
He added though: “On the flipside, however, if the price of Oman crude persists at this relatively low level for the next one or two months, then I would be concerned about the impact it may have for the economy going forward.”
Other international oil price benchmarks too suffered steep falls over the weekend.
Brent crude slipped by as much as 4.2 per cent as it briefly fell below the $50 a barrel for the first time since 2017.
WTI Crude also tumbled to a 13-month low, last trading down 3.6 per cent, according to media reports.
Oman, which has traditionally shipped the bulk of its crude exports to China — the epicentre of the current COVID-19 epidemic, says it foresees no dearth of markets for its Oman Export Blend (OEB).
Non-OPEC Oman is expected to attend talks scheduled in Vienna during March 4–5 where OPEC and non-OPEC producers — collectively known as OPEC+ — will seek a deeper cut in their collective output to help boost international prices. The grouping has already curbed oil output by 1.7 million barrels, but the deal ends at the end of March 2020.