Leaders expressed deep concerns about the grave global health crisis caused by the coronavirus (COVID-19) and its related impacts on the stability of economies and markets, notably in developing countries.
The Executive Director of the International Energy Agency (IEA), Dr Fatih Birol, and the Secretary General of the Organization of the Petroleum Exporting Countries (OPEC), Mohammad Sanusi Barkindo, spoke by phone to review the current situation in global oil markets.
The two leaders expressed deep concerns about the coronavirus (COVID-19), which is already a grave and unprecedented global health crisis with potentially far-reaching economic and social consequences. Dr Birol and SG Barkindo assessed the impact of the virus and the recent broad-based financial and oil market volatility on the global economy. In particular, they discussed the inherent risks of the fast-evolving dynamics, including the most recent developments in global oil markets. They agreed that these create material impacts, particularly for citizens of developing countries including those that rely heavily on income from oil and gas production for essential services and that are especially vulnerable to market volatility.
Dr Birol and SG Barkindo reviewed the impact on vulnerable developing countries and noted that if current market conditions continue, their income from oil and gas will fall by 50% to 85% in 2020, reaching the lowest levels in more than two decades, according to recent IEA analysis. This is likely to have major social and economic consequences, notably for public sector spending in vital areas such as healthcare and education.
They both underscored the importance of market stability, as the impacts of extreme volatility are felt by producers, particularly in terms of much needed income, and by both producers and consumers, who are affected by an unstable and unpredictable market.
SG Barkindo and Dr Birol emphasised the importance of finding ways to minimise the impact of the current situation on vulnerable developing countries. They agreed to remain in close contact on the matter and continue their regular consultations on oil market developments.