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Red Sea Crisis and OPEC+ Cuts Support Oil Prices

Red Sea Crisis and OPEC+ Cuts Support Oil Prices

Brent Crude prices have held…

Low Oil Prices Continue To Widen Algeria’s Trade Deficit

Algeria’s trade deficit increased to US$15.8 billion in 2016 as of October, from US$13.7 billion as of October 2015, with persisting low oil prices weighing heavily on the country’s export revenues.

The depressed price of crude oil, which accounts for 95 percent of Algeria’s exports, has been badly battering Algeria’s economy over the past two years, according to publisher Africa Business Communities. On the other hand, imports have also decreased on the back of the government’s austerity measures and import quotas adopted to counter the loss of export revenues from oil.

Algeria’s total export revenues went down by 23.44 percent annually at the end of last month, to US$22.7 billion. The value of imports decreased to US$38.5 billion as of end-October from US$43.5 billion in October last year.

The Algerian government is currently trying to push a budget for next year envisaging higher taxes, higher gasoline prices, and a freeze in public sector salaries, but has been facing stiff opposition from the public sector and non-ruling parties.

The falling oil revenues and rising economic woes place OPEC member Algeria in a position to desperately seek and work for the cartel to reach a deal on production cuts next week. Algeria, alongside Venezuela and Qatar, is one of the smaller members that have been leading shuttle diplomacy efforts to try to bring the biggest three – Saudi Arabia, Iraq and Iran – on the same page regarding output cuts. Unsuccessfully, so it seems, at least for now.

Just yesterday - Reuters reported, quoting OPEC sources – that Algeria offered to OPEC’s High-Level Technical Committee on Tuesday that all OPEC members except Nigeria and Libya cut between 4 percent and 4.5 percent from their October production, based on OPEC’s estimates.

Iran and Iraq, however, again questioned their contribution to potential cuts, which resulted in yet another stalemate in the talks. Seemingly as a result of this pushback, OPEC has deferred the decision on Iraq and Iran for November 30, according to Bloomberg.

By Tsvetana Paraskova for Oilprice.com

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