The upward trend in crude oil prices is likely to continue next year. This optimistic forecast is supported by the prospect of an increase in Algeria's hydrocarbon exports which could alleviate the country's serious financial difficulties.
The upward trend in oil prices continues. The price of a barrel of Brent oil was quoted last Friday at 51 dollars. Nourredine Legheliel, oil specialist, contacted by Reporters, believes that this upward trend in oil prices will continue in 2021. “The upward trend had started when Brent oil prices reached $34 after climbing to $45. Then, there was a reversal of the trend with the return of optimism on the oil markets. This uptrend continued its way towards $51. There is a good chance that it will continue during the first two quarters of 2021. “The expert cites the causes of this upward cycle in crude prices: “The first cause of this continuation of the upward trend is that the economic recovery has already been integrated by the financial markets (equity market). There is currently a positive correlation between the equity market and the oil market with a lag of a few months giving room for maneuver for the price per barrel to reach 60 dollars. It should be mentioned that the American stock market indices have broken all-time highs (All Time High or historical peak). The second factor is the fall in the price of the American dollar. There is a 67% negative correlation between the price of the US dollar and oil prices. This drop in the US dollar explains the rise in oil prices. The third factor is the cohesion and firmness of OPEC and non-OPEC members. The silence observed by members of OPEC and non-OPEC countries at the end of the recent OPEC+ meeting is, according to market psychology, a positive factor for the price because sensational statements by ministers would have triggered uncertainty in the market with as result in massive profit taking and, consequently, lower prices. The moderate increase in oil production from OPEC and non-OPEC countries, only 500,000 barrels, which occurred on an upward price trend was suddenly ignored by market players.
Regarding Sonatrach, adds Noureddine Legheliel, the drop in its foreseeable turnover of 33% in 2020 is in line with the results of other international companies, in particular the five majors Exxon Mobil, Chevron, Shell, Total and BP. “The latter posted a loss of $16.7 billion in the second quarter of 2021,” he added. It should be recalled that the CEO of Sonatrach Toufik Hakkar had recently declared that Sonatrach's hydrocarbon revenues would amount to 20 billion dollars in 2020 against 31 billion dollars in 2019, i.e. below initial forecasts, 23 to 25 billion dollars.
In an interview granted to the American agency Bloomberg, Abdelmadjid Attar, Minister of Energy, after estimating the drop in Sonatrach's revenues at around 10 billion dollars in 2020, confirms this optimism: "For the year 2021, a hydrocarbon production of nearly 188 million TOE (tonne of oil equivalent) and a level of exports of around 92 million TOE. Hydrocarbon exports will be up 12% compared to the volumes exported in 2020, he underlined. He specified that 30 million tons of oil will be exported in 2021 after satisfying domestic needs (Algeria's OPEC quota 912,000 barrels/day), i.e. one third of Sonatrach's global exports. Regarding gas exports, they will stand at 51 billion billion cubic meters next year, of which 37 billion will be sold via gas pipelines and 14 billion cubic meters in the form of LNG. Sonatrach expects next year, he added, the commissioning of gas projects in progress that will export 10 billion cubic meters of additional gas. The Minister of Energy noted in the process that oil prices between 45 and 55 dollars are acceptable for Algeria.
All these optimistic forecasts should not make us forget that a barrel price of between 90 and 100 dollars is needed according to the international financial institutions to balance the state budget. This means that with this upward trend in oil prices and this rising level of exports, if all goes well, augurs an easing of the country's serious financial difficulties. Modestly, no doubt. As long as the processes of diversification of the economy and rationalization of public finances progress at a rate well below expectations.