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[size=52]Al-Sudani's government faces a difficult test: Falling oil prices threaten to cut salaries[/size]
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The recent decline in oil prices, which is expected to continue until the end of 2025, is one of the sharpest declines in prices since the global financial crisis in 2008, which has increased the concern of many decision-makers in oil-producing countries, including Iraq, regarding its economic future and the negative effects of this development on its economy.
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The reasons for the decline in oil prices are due to the growth in oil supply this year by about 770 thousand barrels per day, according to the International Energy Agency’s forecast, which will boost total supply to an unprecedented level of 103 million barrels per day. It is also expected that this growth will increase next year to reach 1.8 million barrels per day.
A report issued by executives from the two global commodity trading companies, Gunvor and Trafigura, said that oil prices could range between $60 and $70 per barrel due to weak demand from China and the ongoing surplus in global supply.
What concerns us behind these expectations is the position of the Iraqi economy if this decline continues, especially since the only country whose economy will be exposed and put in a stifling financial crisis is Iraq, because its general budget is a rentier budget that depends by about 96% on the sale of crude oil.
Oil expert Hamza Al-Jawahiri confirmed in a statement to Al-Maalouma Agency that "all indicators and expectations of oil market experts confirm that the state of low oil prices will continue until the end of 2025, and the price of a barrel may reach less than $60."
Al-Jawahri added, "The government must review the government budget for the upcoming year 2025 and reconsider calculating the price of a barrel of oil. It must also take strict financial measures from now on to confront the state of falling prices, by severely reducing government spending and taking decisions and following up on them regarding reducing the waste of money and financial corruption, until funds are available that may be a factor in alleviating the crisis, even to a certain extent."
Oil prices have been under pressure due to concerns about falling demand for crude in China and the United States, despite previous expectations of a recovery during the summer.
To confront these risks and problems in the event of a decline in oil prices, economic expert Nabil Al-Ali confirmed to / Al-Maalouma / Agency, "There are many means available to the government, the most important of which is the state's general budget and activating non-oil sources of income, as the state's general budget is the first front through which the oil-exporting country faces the risks and problems of falling oil prices, meaning that it is the entrance through which the government can absorb the negative effects of falling oil prices and avoid its transmission or reduce the severity of its transmission to the rest of the sectors of the national economy.
He added that activating non-oil sources of income has become a strategic necessity to confront the risks and problems created by the risk of a decline in the price of crude oil. It is the second face opposite to the role of the general budget, especially if we know that the percentage of contribution of non-oil revenues in preparing the general budget does not exceed (5%). End / 25m
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The recent decline in oil prices, which is expected to continue until the end of 2025, is one of the sharpest declines in prices since the global financial crisis in 2008, which has increased the concern of many decision-makers in oil-producing countries, including Iraq, regarding its economic future and the negative effects of this development on its economy.
[You must be registered and logged in to see this link.]
The reasons for the decline in oil prices are due to the growth in oil supply this year by about 770 thousand barrels per day, according to the International Energy Agency’s forecast, which will boost total supply to an unprecedented level of 103 million barrels per day. It is also expected that this growth will increase next year to reach 1.8 million barrels per day.
A report issued by executives from the two global commodity trading companies, Gunvor and Trafigura, said that oil prices could range between $60 and $70 per barrel due to weak demand from China and the ongoing surplus in global supply.
What concerns us behind these expectations is the position of the Iraqi economy if this decline continues, especially since the only country whose economy will be exposed and put in a stifling financial crisis is Iraq, because its general budget is a rentier budget that depends by about 96% on the sale of crude oil.
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Oil expert Hamza Al-Jawahiri confirmed in a statement to Al-Maalouma Agency that "all indicators and expectations of oil market experts confirm that the state of low oil prices will continue until the end of 2025, and the price of a barrel may reach less than $60."
Al-Jawahri added, "The government must review the government budget for the upcoming year 2025 and reconsider calculating the price of a barrel of oil. It must also take strict financial measures from now on to confront the state of falling prices, by severely reducing government spending and taking decisions and following up on them regarding reducing the waste of money and financial corruption, until funds are available that may be a factor in alleviating the crisis, even to a certain extent."
Oil prices have been under pressure due to concerns about falling demand for crude in China and the United States, despite previous expectations of a recovery during the summer.
To confront these risks and problems in the event of a decline in oil prices, economic expert Nabil Al-Ali confirmed to / Al-Maalouma / Agency, "There are many means available to the government, the most important of which is the state's general budget and activating non-oil sources of income, as the state's general budget is the first front through which the oil-exporting country faces the risks and problems of falling oil prices, meaning that it is the entrance through which the government can absorb the negative effects of falling oil prices and avoid its transmission or reduce the severity of its transmission to the rest of the sectors of the national economy.
He added that activating non-oil sources of income has become a strategic necessity to confront the risks and problems created by the risk of a decline in the price of crude oil. It is the second face opposite to the role of the general budget, especially if we know that the percentage of contribution of non-oil revenues in preparing the general budget does not exceed (5%). End / 25m
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