Oil prices will average $81 in 2019, says Fitch

23/11/2018 Argaam

 

Oil prices will average $81 per barrel next year, Fitch Solutions Macro Research said in its latest report.

 

Crude prices will recover to average $74.50a barrel this year, the consultancy noted, ruling out any "sustained correction in prices."

 

Brent crude fell from $85 per barrel at the beginning of November to $67, driven by lower global demand, stronger-than-expected supply from the US, Libya and Iraq, and unexpected waivers on Iranian sanctions to eight countries reliant on Iranian oil, such as India, Turkey and China

 

However, Fitch said the recent decline in oil prices is both positive and negative for the global economy.

 

While falling oil prices are good for energy importers, countries that rely on oil exports, such as Saudi Arabia, Brazil, Colombia, Mexico and Malaysia, typically get hit from lower oil prices.

 

"Many of these countries are also suffering from weak investor sentiment and private sector investment, which, combined with lower oil prices, could put downside pressure on growth over the coming quarters," the report said.

 

Fitch warned that lower oil prices would result in slower exports, weaker investment and lower fiscal spending by the government (or larger deficits), which would put downside pressure on growth in major oil-exporting countries.

 

On the positive side, lower prices improve the terms of trade and fiscal accounts, and help to mitigate inflationary pressures of importing countries, many of which have started to come under pressure in recent months," the consultancy noted.

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