An emergency G20 videoconference will take place today to address unresolved issues raised at yesterday’s OPEC+ meeting. As Moscow and
An emergency G20 videoconference will take place today to address unresolved issues raised at yesterday’s OPEC+ meeting.
As Moscow and Riyadh prolong their standoff, neither country has expressed willingness to cut oil production in the face of the COVID-19 pandemic. The outbreak has seen a massive drop-off in transportation and economic activity, which has caused oil demand to plummet by 30% worldwide and prices to slide by 70% since January.
Do not expect the G20 meeting to act as a significant lubricant for agreement. Even if a consensus is reached, analysts predict that convergence would come too late given that the oil market is encountering its largest production surplus ever.
Despite a few promising days of rallying stock market figures in the US, the oil instability is likely to lead global economies into a deeper recession. In a few months’ time, firms are likely to cut jobs across oil-dependent sectors of the economy.
Moreover, expect government spending to dip in countries heavily dependent on oil exports, such as Russia and Saudi Arabia. Such a decrease in spending could lead to, for example, withering welfare benefits for low-income Saudis as well as a collapse of the already unstable Russian ruble.
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