Tebboune Government Set To Grapple With Low Oil Price Under $ 50 Dollars

Prime Minister Abdelmadjid Tebboune’s government has collided with the first hurdles a few days after its inauguration, as oil prices plunged in the last two weeks as crude settled below $ 50 Dollars a barrel, the reference price approved by the Finance Law since June 6th.

The price of Brent crude for the North Sea reached $ 45.84 Dollars a barrel in the middle of the day, noting that that this is the reference price for Algerian oil, while US light crude reached 43.51 Dollars a barrel in midday yesterday also.

Oil prices began to dwindle slightly with the ongoing diplomatic crisis between Gulf countries and  Qatar, but experts’ expectations then reduced the impact of this vexed issue to a large extent on crude prices.

However, with the passing of days, the emergence of new data from the US market, the return of oil drilling platforms to the activity and the high US inventory data, oil prices have fallen more and more and remained below the $ 50 / bbl level, and reached yesterday $ 45 (Brent crude) and $ 43 for light American crude.

Despite the assurances of the Saudi oil minister and his repeated statements that the market is heading for recovery and the balance between supply and demand, but oil prices continued to collapse for the third week in a row, and even reached the lowest levels in seven months, giving the impression that OPEC agreements have shown their limitations in the face of reality on the international market.

The decline coincided with the appointment of the new Prime Minister Abdelmadjid Tebboune, who is bracing to address heavy economic files, such as the housing file, completion of basic infrastructure projects and the lessening of imports and export access outside the hydrocarbons sector to gradually phase out excessive dependence on oil, in keeping with the country’s newly-adopted economic model.

But this raises the question about the room of maneuver of Prime Minister Abdelmadjid Tebboune in the light of the current lackluster situation of the oil market, especially if the prices of crude continue to slump for a longer period.

This adverse contingency, experts say, will reduce the foreign revenues of the country in a scathing manner, on the other hand, and will put the Government in a great embarrassment as oil prices will accordingly remain below $ 50 a barrel, the reference price approved in the Finance Act.