Oil Prices To Fall Below The Reference Price

On the eve of the signing of the Finance Act 2019 by the President of the Republic, Abdelaziz Bouteflika, oil prices collapsed to reach $ 50.46 a barrel, approaching the threshold of 40 or less than $ 50.

The alarm sounded for the government, which prepared an equation for the 2019 budget at $ 50 a barrel as a reference price, at a time economists have sounded the alarm, warning against raising the amount of printed money by the Bank of Algeria, threatening to reach an inflation rate of more than 10%.

“The new oil shock shows that the government will continue its policy of printing the money it has adopted at the end of 2017, following the amendment of the loan and cash law, which threatens to rise inflation within two years to exceed 10%, which he described as the disaster to be touched by Algerians in rising prices of food and services, Abderrahman Mebtoul, an oil expert, told Echorouk.

“Even the Finance Act of 2019, which builds the budget on a reference price of $ 50, does not match the figures of the International Monetary Fund, as Christine Lagarde foundation confirms that Algeria’s management and processing budgets require the marketing of oil at $ 100 a barrel.

“The decline will significantly affect the state budget because each dollar that is lost by the oil market, will make the Algerian treasury lose 300 million dollars annually, meaning that the drop of oil from $ 86 to $ 50 will cost the treasury a loss if the situation continues for more than $ 12 billion, at a time when the prices of natural gas also noticed an unprecedented drop, calling on the government this time to quickly and urgently go out of the mantle of fuel and dependence on oil revenues, and discuss the prospects for the development of the industrial sector, which should be the alternative for the next stage”.

The oil finished trading on Christmas holidays with a decline of more than 6% of its price a week ago, to record a sharp decline and erase the gains in 2018.

This decline came as markets were hit by concerns about the global economic slowdown, and Brent crude prices fell by $ 3.35 a barrel, or 6.2%, to reach $ 50.47 a barrel, with Black gold reaching down 42% from the highest price this year In October, with global benchmark crude reaching the highest price at $ 86.74 a barrel.