Oil prices rise with tensions in the Middle East
On Monday, oil prices rose as a result of instability in the Middle East region after Israel launched a major attack on the Gaza Strip, which threatens its expansion and its impact on the surrounding oil-rich areas, but a new wave of Covid-19 restrictions in Asia raises fears Reduced demand.
Tensions increased in the Middle East after Israel launched a major attack on the Palestinian Hamas organization, which heralds a war that could expand in the region and threaten foreign companies operating in the oil fields in the region and stop them from working.
However, the recovery of the main US pipeline network from supply concerns and a new wave of Covid-19 restrictions in Asia has brought back fears of reduced demand.
Brent crude futures rose 5 cents, or 0.08%, to $ 68.77 a barrel by 05:36 GMT, and WTI rose 7 cents, or 0.1%, to $ 65.42
The two decades jumped about 2.5% on Friday and were able to make slight gains last week, marking the third consecutive weekly increase.
Investors have remained wary about concerns that the fast-spreading coronavirus, first detected in India, will spread to other countries.
Some Indian states said on Sunday they would extend COVID-19 lockdowns to help contain the pandemic that has killed more than 270,000 people in the country. There are concerns that the nation’s annual budget may dwindle as it fails to take into account the crippling second wave of COVID-19 infections.
Meanwhile, US energy companies added oil and natural gas rigs for the third week in a row as higher crude prices pushed some drilling workers back to the well plate. link
Will the 2021 budget be able to restore economic growth?
The state’s general budget is defined as the government’s program, through which it aims to achieve its contents within a year, and it is represented in eight dimensions (political, economic, financial, social, accounting, administrative, legal, and informational)
But the circumstances of the year 2020 caused difficult situations for Iraq in managing its situation Financial, from the drop in oil prices, and the repercussions of the Corona pandemic, as economic growth declined by a large rate (- 11 percent), and therefore the 2021 budget had to address this, with allocations aimed at developing the productive and service sectors to activate economic activity, so will the 2021 budget be able to restore growth Economic growth and its transformation from negative to positive growth?
Prof. Ahmed Omar Al-Rawi from the Al-Mustansiriya Center for Arab and International Studies explained the possibility of this by saying: “Before answering, the budget preparation and the reasons for its delayed approval should be reviewed, represented by discussions and the loss of the first quarter of 2021, and thus it recognized its basic items prepared by the government, such as adopting the foundations in calculating public revenues.
(Exporting 3,250 million barrels of oil per day, including 250,000 barrels from the Kurdistan region, calculating the price of $ 45 per barrel, and adopting the dollar exchange rate of 1,450 dinars).
Al-Rawi added to Al-Sabah: “The budget has come out with a total spending volume of 129,993 trillion dinars, while public revenues are estimated at 101,320 trillion dinars and a deficit of about 28,672 trillion dinars, representing about 22 percent of the size of the budget, to remain The source of bridging the deficit gap is internal and external borrowing, which will exacerbate the public debt problem.
He believed that “the ability of the 2021 budget to activate economic activity is limited, as it does not take into account the economic sectors, and that the adjustment of economic growth will be subject to high oil prices, and that the allocations approved for the productive sectors are very small in comparison to the challenges facing those sectors.”
The narrator explained the repercussions of the delay in the budget on the economic situation that “it led to a delay in the implementation of the government program within three months, the suspension of activity and the service and investment programs included in the budget, and the disruption of employment in public sector jobs, as well as the impact of the private sector by disrupting the implementation of investment programs, and thus worsening unemployment.”.
Stressing that «the exchange rate adjustment to 1450 dinars to the dollar, led to a reduction in the real value of individual income by not less than 25 percent, which affected people with limited incomes as a result of high prices, bringing the percentage of those living below the poverty line to more than 27 percent of the population of Iraq»
“Reducing incomes as a result of changing the exchange rate will lead to a contraction of economic activity, due to the rise in prices, which will exacerbate the phenomenon of unemployment, which has become worrisome, as a result of its reaching more than 30 percent of the workforce.”
He added that «the adoption of the budget on borrowing to fill the deficit in the budget, will exacerbate the size of public debt, which is expected to reach the end of 2021 to about 144 trillion dinars, and although the budget indicated its endeavor to reduce the deficit within its minimum limits, we find that its percentage amounts to 22 percent of the size of the budget. And about 16 percent of the gross domestic product ».
Al-Rawi suggested “adopting rationalization in spending through serious and effective programs and policies, including the restructuring of some state institutions, by canceling and merging many institutions, in addition to setting supervisory controls in the budget law on exchange operations to reduce corruption, as well as setting controls to enhance non-oil revenues, Especially the revenues of the border crossings and the control of their revenues, including the region’s ports, ”calling for“ the enactment of articles in the budget law to oblige the Ministry of Finance to inventory and re-evaluate state property, especially real estate, to enhance oil revenue. link
It is Monday and the time is 7:40 AM and the EID holiday is scheduled to be over today in Baghdad. The question remains will it make any difference? Time will tell
Somebody is stating the 20th is when to expect big announcements from the CBI. I won’t hold my breath but if it happens I am grateful
This is in case someone feels that they’re with Bill Murray in “Ground Hog Day”.
Punxsutawney Phil predicts 6 more weeks of patience. Pennsylvania’s most famous groundhog emerged from his burrow on a stormy Sunday morning and saw his shadow, declaring there would be six more weeks of patience.
Source: Dinar Recaps
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