Money energy expert Christiane Baumeister: "Falling oil revenues are dangerous in domestic politics"

23:05  30 november  2020
23:05  30 november  2020 Source:   wiwo.de

Nigeria slips into recession blamed on COVID-19 and oil prices

  Nigeria slips into recession blamed on COVID-19 and oil prices The country’s economy shrinks two quarters in a row amid contraction in its oil sector.Africa’s biggest economy is in recession for the first time since 2016. The recession four years ago was its first in a generation, and the country emerged from it the following year.

Christiane Baumeister . University of Notre Dame; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR). Some observers have conjectured that oil supply shocks in the United States and in other countries are behind the plunge in the price of oil since June

Christiane Baumeister is Robert and Irene Bozzone Associate Professor of Economics at the University of Notre Dame. --- With 20 departments across the

energy expert Christiane Baumeister on the future development of the oil markets - and the centrifugal forces in OPEC.

Die Ölnachfrage dürfte sich wegen Corona zunächst nicht erholen. Die Folgen der Pandemie werden sich noch einige Zeit in der Nachfrage widerspiegeln, vermutet Christiane Baumeister. © dpa Oil demand is unlikely to recover initially due to Corona. The consequences of the pandemic will be reflected in demand for some time, believes Christiane Baumeister.

Christiane Baumeister is a professor in the economics faculty at the University of Notre Dame in the US state of Indiana.

WirtschaftsWoche: Ms. Baumeister, what does the election victory of Joe Biden mean for the oil market and the American oil industry?

Christiane Baumeister: The history of the American oil industry shows that it depends less on the president and more on developments in the macroeconomic environment and technological progress. The fracking industry experienced its boom under Obama, although he was strongly committed to climate protection and imposed regulations for the oil industry. It is to be expected that Joe Biden will also increasingly enforce measures in this direction. At the same time, containing the coronavirus and thus reviving the American economy will be his priorities - which should also have a positive effect on the oil industry. There is a tendency towards diversification on the part of the large energy companies, which are equipping their portfolio with renewable energies and are no longer betting one-sidedly on black gold.

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Oil prices have fallen to their lowest level since 2003, sinking below a barrel before recovering slightly on Monday. As one of the world's largest oil producers, Russia has been a prominent victim of the plunging prices. About half of Russia's budget revenues currently come from energy exports.

For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can The fall of Venezuela’s Nicolas Maduro may lead not to the transitional government many have hoped for Energy (and climate) are areas in which the United States and China have common interests, and

And what about the price of oil?

I see the oil price in a corridor between 35 and 50 dollars by the middle of next year. Because the oil demand is unlikely to recover initially due to Corona. The consequences of the pandemic will be reflected in demand for some time to come.

On November 30th, OPEC wants to discuss its further strategy. Do you then expect drastic resolutions on oil production?

That is difficult to assess. The fact is: falling oil revenues are tearing large holes in the national budgets of the producing countries and are therefore dangerous for them domestically. Therefore, OPEC could come to a point where its members no longer adhere to volume agreements - and everyone gets as much oil out of the ground as they can. OPEC could break up in the medium term.

Africa's economic giant Nigeria at a 'critical juncture'

  Africa's economic giant Nigeria at a 'critical juncture' More than 200 million Nigerians will slide further into poverty as the coronavirus pandemic has sent oil prices tumbling and pushed Africa's largest economy into recession. In addition to the pandemic, the economy suffered from a fall in global oil prices and diminishing production. "Just when the government should support the economy and its most vulnerable citizens, its revenues plummeted," said Mali.While oil prices have gone up slightly, the outlook remains sombre for a country where crude accounts for about 90% of foreign-exchange earnings and half of government revenue.

More oil and gas on global markets has also benefited the world's energy consumers by pushing down costs. That energy must be much cleaner if the world wants to prevent catastrophic global warming. It will create tensions in unstable parts of the Middle East as oil revenue starts to dry up.

Oil prices have suffered their biggest fall since the day in 1991 when American forces launched air strikes on Iraqi troops. Here's why it's happened and what it means. JUST WATCHED. How oil prices will affect US politics .

Some experts believe that global oil demand has passed its historic high. How realistic is this “peak demand” scenario from your point of view?

The current debate exaggerates the short-term influencing factors. Peak demand has not yet been reached, it will take years. A wave-like movement in demand is more likely in the coming years. The demand for oil depends heavily on economic growth, so it rises after the crisis, especially when the emerging economies start up again economically. The politically enforced energy and climate change is a rather evolutionary process and will not abruptly reduce demand. In many emerging countries, motorization has not yet been completed, and I don't believe that millions of Indians and Chinese will switch directly to electric cars. It is likely, however, that oil demand will not grow as strongly in future as it did in the past. Corona leads to structural and permanent changes in consumer behavior and in the working world - with more home offices, less commuting, fewer business trips.

What role will the American fracking industry play in the oil market in the future?

The fracking industry is currently facing major structural problems. She was hit hard by the crisis. The industry has seen a sharp decline in oil drilling and investment. This trend will only be reversed when the economic situation improves significantly and the oil price becomes more stable.

More on the subject: raw materials analyst Eugen Weinberg sees a glut of oil rolling towards the world - and predicts serious consequences for the oil markets.

Geelong oil refinery 'energy hub' plan gains global backers .
Viva Energy, which is considering shutting down the 65-year-old refinery, said it had entered into agreements with top global energy companies to transform the site.The owner of the Geelong oil refinery has struck deals with Japan's Mitsui, France's Engie and trading giant Vitol to become partners in its plan to develop a shipping terminal at the site to import natural gas and consider other expansion opportunities.

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